Pentagon Encouraged by Wall Street Take on Aerospace and Defense StocksMay 27, 2011
The top U.S. weapons buyer said that the Pentagon is closely watching the financial health of the aerospace and defense industry, and so far it likes what it sees, according to a Reuters report. "A strong, technologically vibrant and financially successful defense industry is in the national interest," said Ashton Carter, undersecretary of defense acquisition, technology and logistics. "And importantly, the government's interest is not short term but long term, like those of long-term investors." He gave his remarks during a Capitol Hill luncheon co-sponsored by the Senate's aerospace caucus and the Aerospace Industries Association, a trade and lobbying group. As defense spending tapers off from its post-September 11, 2001, surge, the industry must adjust with the new fiscal reality. Reuters noted that outgoing Defense Secretary Robert Gates said that his goal was to preserve a U.S. military "capable of meeting crucial national security priorities, even if fiscal pressure requires reductions in that force's size." To do that, Carter said the Defense Department would, according to Reuters, promote policies "that provide for long-term innovation, efficiency, profitability and productivity growth in our industry." Carter said that he was closely watching the financial health of the aerospace and defense stocks, and how Wall Street regarded the industry. He noted that the median stock price for the top 20 aerospace and defense contractors is about 92.5% of their 52-week trading highs, according to Reuters. Given those numbers, Carter said the Street shows "continuing confidence in the health of our industry that is higher than it is for global information, automotive, steel, energy, telecom and information technology sectors.” He also noted that the five-year earnings-per-share analyst consensus predicted 11% growth for the top 20 aerospace and defense companies, which he added "is moderate but … augurs well for the future.” |
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