MW Buy these stocks, analyst says, as Pentagon urges missile suppliers to increase production

By James Rogers

The Pentagon reportedly wants its missile suppliers to double or even quadruple production, which could provide a revenue boost for a number of defense contractors

From hypersonic missiles to the Golden Dome missile defense shield, Vertical Research Partners sees significant opportunities ahead for missile suppliers.

The Pentagon's reported push to beef up America's missile arsenal spells more good news for a number of defense contractors, according to Vertical Research Partners.

The Wall Street Journal reported that Pentagon leaders want missile suppliers to double or even quadruple production amid geopolitical tensions. The Pentagon, the report said, is alarmed at low U.S. weapons stockpiles, as a result of the conflict between Ukraine and Russia, in the context of a potential future China conflict. This could be another godsend for missile makers.

The U.S.'s push for more missiles comes on top of already strong global demand, particularly from European countries looking to double their defense spending, according to Vertical Research Partners. In a note, analyst Robert Stallard wrote that, while there are practical challenges to executing such a big production ramp, missile suppliers could still enjoy annual growth of 10% to 20% in the next few years.

Within his coverage, Stallard estimates that defense contractor Leonardo DRS Inc. (DRS) has the largest missile-related exposure, at over 20% of revenue. U.S.-based names RTX Corp. $(RTX)$, Lockheed Martin Corp. (LMT) and L3Harris Technologies Inc. (LHX) also have notable missile exposure, which accounts for more than an estimated 10% of their respective revenues.

He has buy ratings on the shares of Leonardo DRS, RTX, and L3Harris Technologies, but has a hold rating on Lockheed Martin's stock.

Earlier this year, RTX's Raytheon business was awarded a $1.1 billion contract from the U.S. Navy. The contract is an effort to boost production of AIM-9X Block II missiles. RTX recently won a $5 billion contract for the U.S. Army's Coyote missile system.

Stallard noted that current missile demand encompasses both offensive and defensive capabilities, citing "surging interest" across air, sea and land domains. The analyst also pointed to the development of hypersonic missiles. He explained that air defense systems now have to account for drones in addition to aircraft and inbound ballistic missiles. This has led to an increase in counterdrone technology on top of conventional defenses, further fueled by the U.S. Golden Dome initiative, he added.

Vertical Research Partners also has buy ratings for defense-related names Boeing Co. $(BA)$, GE Aerospace $(GE)$, Heico Corp. $(HEI)$, Howmet Aerospace Inc. (HWM), TransDigm Group Inc. (TDG), and Textron Inc. $(TXT)$.

-James Rogers

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October 14, 2025 14:02 ET (18:02 GMT)

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