By: Carter Copeland 

Is anything buyable in defense here? I don’t want to be tone deaf and ignore the fact that defense is continuing to break down (for reasons we think make sense), but LLL’s Q1 call went a long way to reinforce the bull case that we see unfolding in the coming years. And while we’re not too keen to broadly buy defense weakness here given a lack of clear valuation support or an identifiable catalyst path that supports a bounce in the near term, we do feel good about the relative differences that underpin our bullish LLL stance vis-à-vis peers: sustainable margin improvement, a better earnings algorithm (less dependency on pension income for EPS/FCF), and a more favorable ownership base (less crowded than the major primes).

LLL Report Here