A Morgan Keegan analyst on Monday dropped revenue expectations for several defense industry contractors, noting that government spending on conventional weapons systems is likely to fall.
Analyst Brian Ruttenbur said he expects defense spending to slow down dramatically, though large budget cuts like the ones that followed the Vietnam and Cold wars are unlikely. Conventional weapons are likely to see a drop in spending while unmanned systems, cybersecurity, missile defense and other areas may continue to enjoy increased demand.
Ruttenbur dropped revenue expectations for Lockheed Martin Corp., Northrop Grumman Corp., L-3 Communications, Raytheon Co. and General Dynamics.
However, he maintained ratings of "Market Perform" for Lockheed Martin and Northrop Grumman, and "Outperform" for L-3, Raytheon and General Dynamics.
Raytheon shares fell 39 cents to $46.09 in morning trading Monday, Lockheed shares slipped 2 cents to $68.03, L-3 Communications share tumbled $1.09, or 1.5 percent, to $70.29 and Northrop shares fell $1.13, or 1.8 percent, to $60.63.