Bank of America Merrill Lynch’s Ron Epstein on Defense-Related Investment Accounts, Navy Programs

Ron Epstein, senior equity analyst at Bank of America Merrill Lynch, has said he expects defense-related investment accounts valued at approximately $179 billion to grow at a rate of 10 percent “depending on the year.”

“Fiscal ’17 is where we are today, ’18 is transition, and then I expect to see acceleration going to fiscal ’19, fiscal ’20, fiscal ’21. That growth will be in the very high single or low double digits,” Epstein told Barron’s Asia reporter Leslie P. Norton in an interview published Monday.

He said that some of the programs that are likely to be funded as part of the Navy’s plans to increase its fleet size to 355 ships include the General Dynamics-built Ohio-class ballistic missile submarine program, DDG-51 missile destroyers and amphibious assault ships.

Epstein also cited Northrop Grumman’s B-21 long-range strike bomber and Lockheed Martin’s F-35 aircraft as other programs that are likely to receive defense funds as the U.S. works to “project force” worldwide and build up its strategic deterrence capability.

He also gave several aerospace and defense contractors a “buy” rating such as General Dynamics, Textron, TransDigm Group, Raytheon, Lockheed and Northrop.