Wells Fargo Analyst Sees Additional Upside In These 2 Defense Stocks

Over the last week, the United States and its NATO allies supplied Ukraine with 17,000 anti-tank missiles in the wake of the Russian invasion.

Restocking of supplies may lead to an overall increase in defense spending, which could provide upside for some of the best positioned stocks in the defense sector including General Dynamics Corp (NYSE: GD) and L3Harris Technologies Inc (NYSE: LHX), according to Wells Fargo analyst Matthew Akers.

"It's a lot of weapons, but in the context of, you know, call it a $750 billion defense budget, it's really not a huge number," Akers said Monday on CNBC.

The Bigger Question:  What happens to overall U.S. defense spending moving forward?

"I think the clear direction is that it's going to go higher," Akers said, noting it's unlikely to see opposition to defense spending in a midterm election year.

Akers expects General Dynamics investors to reap the benefits of an increased defense spending budget and also benefit from general business growth recovery.

Related Link: Wells Fargo Raises Price Target On Several Aerospace & Defense Companies

L3Harris is an even cheaper option on a pension-adjusted earnings basis, he said. The company is also more "platform agnostic," Akers said: "You don't need to take a bet on which platform we're gonna spend more on. They're really a supplier kind of across the DoD."

As investors get more clarity on defense spending, General Dynamics and L3Harris are well positioned to benefit, he stressed.

Akers raised the General Dynamics price target from $235 to $282 and the L3Harris target from $240 to $291.

GD, LHX Price Action: At publication time, General Dynamics was up 3.03% at $252.72 and L3Harris was up 3.72% at $276.81.

Photo: courtesy of General Dynamics.