US prepares to impose its most severe economic cutoff measures ever on Iran

The FY2026 defense appropriations agreement includes more than $6.3 billion for 13 critical munitions and grants conditional multiyear procurement authority for eight of those programs, a tailwind for RTX Corp. as it scales production of AMRAAM air-to-air missiles, Standard Missiles and Tomahawk cruise missiles. RTX's order backlog reached a record $289 billion by the end of second quarter fiscal 2026. The company will spend $25 million to expand its Niepołomice site in Poland, which delivers tubular assemblies for commercial and military engines, following a $100 million capital outlay announced in April for its Rzeszów facility. RTX closed at $185.01 on October 1 with a market capitalization of about $249.3 billion, trading at a trailing P/E of 33.62x and a forward P/E of 24.57. Hedge fund ownership slipped from 95 funds in Q1 2026 to 92 funds in the following quarter, while BlackRock remains the largest institutional stakeholder with 110.53 million shares, or 8.20% ownership.

L3Harris Technologies has secured an undefinitized contract from Lockheed Martin worth more than US$6b over seven years to expand propulsion output for the THAAD missile defense system. The arrangement follows a prior framework with the Department of War to quadruple THAAD propulsion production and includes both a new Solid Rocket Boost Motor facility and added Liquid Divert and Attitude Control capacity. The contract lands as L3Harris shares have fallen about 9% over the past month and 22% year to date on a share price basis, though the 3 year total shareholder return is up roughly 53%. The company closed at $236.60, while the most followed narrative estimates fair value at about $342 per share using an 8.4% discount rate, framing the win as one more contract feeding into a broader backlog and earnings story. The story could break if U.S. budget pressure trims space spending or if prime contractor delays slow conversion of the reported US$42b backlog.

The US Navy has placed a multi-year contract with Raytheon, a unit of US defense giant RTX, to produce the Standard Missile 6 (SM-6) interceptor. The contract is worth up to $24.4 billion. It covers five years with an option to extend for another two, aiming to ensure a stable and reliable supply of the SM-6, which can carry out both strike and missile defense missions. The deal is part of a series of large weapons contracts pursued this year as the US Department of Defense seeks to replenish ammunition stockpiles depleted by conflicts in the Middle East and push defense companies to accelerate production. In late September, it signed a $20.7 billion multi-year preliminary contract for Raytheon's AMRAAM air-to-air missile, and in July it awarded Lockheed Martin a $58.6 billion Patriot interceptor missile contract. Industry executives have warned that Congress has not yet approved the funding needed for these contracts, and that defense companies may be unable to make large-scale investments in components and equipment until Congress acts.

Kratos Defense & Security Solutions is expanding its solid rocket motor capabilities through Prometheus Energetics, a joint venture with RAFAEL that will build a state-of-the-art energetics manufacturing campus on an approximately 500-acre site near the U.S. Navy and Army facility in Crane, Indiana. Kratos Defense and RAFAEL have committed up to $175 million in capital for the venture, covering the manufacturing facilities, property, equipment and personnel needed for the planned operations. Following construction and completion of RAFAEL's technology transfer and certification, Prometheus is expected to begin solid rocket motor production in 2027, with Kratos' investment in the venture ramping up during 2026 to support development of the planned manufacturing infrastructure. The new capacity could strengthen Kratos' position in propulsion and rocket systems, adding another manufacturing base alongside its existing Zeus solid rocket motors. Rivals Northrop Grumman and Lockheed Martin are also expanding solid rocket motor manufacturing capacity across their U.S. facilities to support defense and space propulsion programs and strengthen the domestic propulsion supply chain.

GE Aerospace and Kratos Defense successfully ignited the GEK800 turbofan cruise missile engine, a fresh data point for investors watching General Electric's defense story. The news lands against a mixed stretch for the share price: a 30 day share price return of 7.21% and a 90 day share price return of 15.22%, alongside a 1 year total shareholder return of 6.08% and a very large 5 year total shareholder return. General Electric now trades only slightly below some intrinsic value estimates while sitting well under the average analyst target, and on the narrative view its fair value sits at $307 against a last close of $317.89, a 3.5% overvalued reading. On the P/E lens the shares trade on 36.8x earnings, above both the 35.6x industry average and the same 35.6x peer group level, and above a fair ratio estimate of 34.7x. The company's reliance on Boeing's production tempo and exposure to tight aerospace supply chains remain the key risks to the wide moat narrative.