Northrop Grumman (NYSE:NOC), Boeing (NYSE:BA), General Dynamics (NYSE:GD), Lockheed Martin (NYSE:LMT) and Defense Budget

Secretary of Defense Gates gave his input on the programs which will effect defense contractors like Northrop Grumman (NYSE:NOC), Boeing (NYSE:BA), General Dynamics (NYSE:GD) and Lockheed Martin (NYSE:LMT).

FBR gave their take on the companies and how they'll be effected by the comments Gates made.

FBR said, "Secretary of Defense Gates just held a briefing outlining changes to programs related to the budget environment, which we talked about when we downgraded the group in December. Our initial take is that Northrop Grumman, Boeing and General Dynamics come out of this in the best shape. Everyone is going to have an opinion but here is how we established ours.

Northrop Grumman: Gates talked about funding a long range strike bomber and NOC has been doing work in this area / for this platform for a long time and they are likely best positioned to win it. Also they will be well positioned for a new Army vertical take off UAV since, we believe, Honeywell’s (NYSE:HON) vertical take-off UAV has been defunded. Finally, it looks like the Navy will develop and new electronic warfare jammer which NOC will likely compete for."

Boeing: It looks like DOD will fund additional evolved expendable launch vehicles (EELV) which Boeing builds. Additionally, as a hedge against F-35 delays, DOD will buy more F/A-18s’.

General Dynamics: DOD is killing the Expeditionary Fighting Vehicle, which is bad but known. However they have identified funding to extend the life of the Abrams Main Battle Tank and Bradley Fighting Vehicle, which is positive. Additionally the Army putting more money towards "tactical networks" which is GD’s part of JTRS. Plus they have WIN-T.

Lockheed Martin: Cutting 122 aircraft from JSF to fund more R&D. We thought the number would have been closer to 200 but we have heard some estimates for a cut that was much great then that. All in positive relative to expectations.