Defense giant Lockheed Martin (NYSE:LMT) struggled on an otherwise pleasant day for the markets. Indeed, LMT stock closed down 6% today on news that the U.S. will purchase fewer F-35 jets than previously assumed.
So what is going on with Lockheed?
Well, this morning, investors learned that the U.S. Department of Defense will apparently budget for 61 F-35 fighter jets in fiscal 2023. This is about 33 fewer planes than expected, as an anonymous source told Bloomberg.
The Pentagon previously intended to purchase 94 jets in 2023, an increase from this year’s 85. As such, today’s news comes as a surprise to investors. For context, the national security budget for fiscal 2023 is expected to exceed $770 billion.
In lieu of the additional F-35 jets, the U.S. Air Force is upping its supply of F-15EX jets, produced by Boeing (NYSE:BA). From the 14 planes requested in the fiscal 2021 budget, the Air Force will pursue 24 of Boeing’s non-stealthy jets.
What else do you need to know about Lockheed stock lately?
LMT Stock Drops as Defense Budget Concerns Loom Large
Lockheed has generally been immune to the bearish wave taking over the markets this year. The S&P 500 is down nearly 9% year to date, LMT is up nearly 20%. Today’s drop is rare for Lockheed in 2022.
However, some analysts have already called today’s selloff an overreaction. Lockheed generated roughly $9.2 billion in operating cash in 2021. Given expectations for an increasing U.S. defense budget in coming years, Lockheed should continue to see strong revenue flow.
In regard to the defense budget cut rumors swirling, an anonymous Lockheed spokesman conveyed confidence to Reuters:
“It is premature to speculate about the proposed defense budget prior to its release. The F-35 is the most lethal, survivable and connected fighter in the world today, and is strengthening our allies, deterring our enemies, and bolstering our economy.”
The final details of the defense budget remain unclear. Regardless, investors will be watching the company closely as things unfold.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.