US Aerospace & Defense: 2Q26 Mid-EPS Update: More To Go On Defense

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US Aerospace & Defense: 2Q26 Mid-EPS Update: More To Go On Defense

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24 Jul 2026 09:59:39 ET │ 21 pages

US Aerospace & Defense

2Q26 Mid-EPS Update: More To Go On Defense

CITI'S TAKE

John Godyn AC

We're updating EPS estimates and price targets as a result of multiple recent +1-212-816-8014

EPS prints including LMT, NOC, RTX, and TDY. Although NOC’s results were john.godyn@citi.com

impacted by negative EAC adjustments/execution issues; in totality, bullish

defense themes were clearly expressed through EPS season thus far in A&D Bradley Eyster

- perhaps best showcased by solid beats/raises at LMT and RTX. We argued +1-212-816-3661

that R/R was asymmetrically positive across defense heading into 2Q26 bradley.eyster@citi.com

EPS season and we believe there will be follow through on recent results.

Jeremy E Jason

Revisiting 2Q26 preview thoughts. We’ve argued that we are in a backdrop of +1-212-816-7789

strong fundamental trends across nearly every vertical within Aerospace & Defense jeremy.jason@citi.com

setting up beats/raises for most companies in our coverage regardless of whether

they are ‘aerospace first’ or ‘defense first’ stocks based on their exposures. However,

the setup into EPS is more asymmetric for defense because investors appear

concerned about ‘Peak Defense’ and a possible ‘Blue Wave.’ We don’t blame them

because we can’t rule out those risks. But we’ve argued that risks do appear to be

increasingly priced in (see Aerospace First, Defense Next’ Is Defense Now; Upgrade

LMT to Buy 7/1/25). Accordingly, we’ve emphasized that there exists much more

opportunity for multiples to drive outsized reactions in defense as investors realize

that trends are in fact very likely to accelerate into YE26, 2027, and beyond for many

companies and across multiple themes.