Signal: “Hamas has created additional demand” – analysts

Analysts from TD Cowen and Morgan Stanley highlighted the “Israel situation” as a key factor driving defense industry revenues during General Dynamicsearnings call last Wednesday (October 25).

On the earnings callvice president and chief financial officer Jason Aiken announced that General Dynamics had net income of $836 million throughout the third quarter of 2023. This represents a 6% year-over-year increase on third-quarter revenue of $10.6 billion.

“Hamas has created additional demand, we have this $106 billion request from the president,” said Cai von Rumohr, managing director and senior research analyst at TD Cowen.

On Oct. 26, the day after the earnings call, von Rumohr gave a “buy” rating to General Dynamics stock — which TD Asset Management owns more than 16 million dollars.

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From GlobalData

Escalating conflict, increasing profits

The world’s biggest defense companies, mainly based in the US, look poised to reap increased profits amid conflicts in the Middle East and Africa. Ukraine.

General Dynamics reported total revenue of $39.4 million last year, the company’s highest levels since before 2017, according to GlobalData research.

“The situation in Israel is obviously dire, frankly, and a situation that’s just evolving as we speak, but I think if you look at the demand growth potential that comes out of that, the biggest thing to point out that really stands out is probably on the of artillery,” General Dynamics’ Aiken said.

Reports state that more than 8,000 Palestinians and 1,500 Israelis have been killed since the conflict broke out.

US President Biden’s pledge of $106 billion in military and humanitarian aid to Israel and Ukraine has been welcomed by the world’s largest defense companies.

During Raytheon Technologies’ third-quarter earnings call on Oct. 24, chairman and CEO Greg Hayes said Raytheon “will see a benefit from this restocking.” Morgan Stanley analyst Kristina Liwag added that the Israel-Palestine situation “appears to it fits quite nicely with the Raytheon Defense portfolio’.

Massachusetts-based Raytheon makes the missiles used by Israel’s “Iron Dome” missile defense system.

General Dynamics, the world’s fifth largest defense company, supplies the Israeli military with weapons, including MK-82 and 84 bombsF-15, F-16 and F-35 fighter jets and a variety of combat vehicles and armored personnel carriers.

In the week of the initial Hamas attack (Oct. 7), exchange-traded funds are tracking defense giants including Boeing, General Dynamics, Lockheed Martin, Northrop GrummanRaytheon and Textron rose noticeably.

From October 4 to 11, the iShares US Aerospace and Defense ETF posted a 4% increase in net inflows, equivalent to $7.2 million.

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