Canada has unveiled a new streamlined agency tasked with quickly buying military equipment.
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Canadian Prime Minister Mark Carney announced the creation of the “Defence Investment Agency,” which will handle more than $60 billion of military equipment purchases in coming years and help Canada meet its international defense obligations.
In announcing the new agency, Carney said it will replace Canada’s current procurement system, which has been criticized for being complex, bureaucratic, and sluggish when it comes to military equipment acquisitions.
Pressured by Allies
The U.S. and other allies have been pressuring Canada to bolster its defense capabilities. The federal government in Ottawa has pledged to meet NATO’s 2% GDP military spending threshold, as well as NATO’s 5% defense investment pledge by 2035.
The new military procurement agency is seen as positive for U.S. defense contractors such as Lockheed Martin (LMT), Northrop Grumman (NOC), and RTX Corp. (RTX) that count the Canadian government as a customer. Canada’s defense industry contributes $10 billion annually to the country’s GDP and supports more than 80,000 jobs.
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The stock of Lockheed Martin has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on seven Buy, nine Hold, and one Sell recommendations issued in the last three months. The average LMT price target of $480.13 implies 3.95% upside from current levels.
