Defense Tech Index: -15% M/M | FY27 Cont. Resolution Risks Rear Their Ugly Head

研报英文原文证据摘录

Defense Tech Index: -15% M/M | FY27 Cont. Resolution Risks Rear Their Ugly Head

I N D U S T R Y N O T E

J u n e 3 0 , 2 0 2 6

Industrial Software & Defense Tech

CONCLUSION Clarke Jeffries

June hosted the largest seq. decrease for the Defense Tech index in the past twelve- Sr. Research Analyst, Piper Sandler & Co.

months, retreating 15% with nearly all subsectors experiencing declines save for 503 275-8318, clarke.jeffries@psc.com

Component Manufacturers (with which may partially be due to commercial aerospace

exposure). We think broad weakness in Defense stocks is squarely due to rising concerns Related Companies: Share Price:

that the upcoming budget approval process may see all too familiar political dysfunction AVAV 165.07

KRMN 49.92and the FY27 DoW budget will be funded under a continuing resolution. Compounded

KTOS 49.86

by dimming prospects of any near-term passage of Reconciliation 3.0 or the $88B Iran PLTR 116.67

supplemental and we believe investors are re-balancing exposure if some of the most

lucrative reconciliation-funded upside scenarios (especially in emerging categories) are INDUSTRY RISKS

fading for the sector. We believe there are still substantial award opportunities on the Subject to procurement demand by the U.S. and

horizon (large portion of OBBBA funds yet to be committed in FY26) but for now, the sector allied nations for defense equipment, solutions

is for sale. and services.

• Sector Spotlight | Prime Component Manufacturers +5% m/m. Prime Component

Manufacturers led the index this month driven by Ducommun (+22%), Woodward

(+22%), Hexcel (+11%), Teledyne (+8%), and TransDigm (+6%). We suspect that is may

be due to the commercial aerospace exposure present in some of these companies

rather than overwhelming reliance on defense spending.