Shares of Lockheed Martin (LMT) slid following another tweet from President-elect Donald Trump criticizing "cost overruns" of the company's F-35 fighter jet. However, JPMorgan analyst Seth Seifman believes the tweet is more about leverage and not a sign that Trump will scrap the program.

COST OVERRUNS: President-elect Donald Trump tweeted about Lockheed Martin's F-35 fighter jet, saying: "Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing (BA) to price-out a comparable F-18 Super Hornet!" This is not the first time Trump has tweeted about the costs of the fighter jet. Earlier in the month, the President-elect had used his personal Twitter account to say the company's F-35 "program and cost is out of control," adding that "billions of dollars can and will be saved on military (and other) purchases" after he is inaugurated as President on January 20. The latest tweet comes only a couple of days after Lockheed CEO Marillyn Hewson met with Trump. "I appreciated the opportunity to discuss the importance of the F-35 program and the progress we've made in bringing the costs down. The F-35 is a critical program to our national security, and I conveyed our continued commitment to delivering an affordable aircraft to our U.S. military and our allies," Hewson stated following that meeting.

F-35 'HERE TO STAY': In a research note, JPMorgan's Seifman told investors that he believes President-elect Donald Trump's tweet last night is about leverage and not a sign that the new administration will scrap Lockheed Martin's F-35 program in favor of an upgraded Boeing F-18. The analyst noted that the Air Force and Marines do not want the F-18 and while it might offer plenty of advanced capabilities, "it will never be an F-35." The tweet could mean leverage over Lockheed on reducing the F-35 price, it may mean leverage over defense contractors more broadly, or it may be some combination of the two, he argued. Nevertheless, Seifman sees further headline and margin risk for Lockheed because of its reliance on the F-35. Beyond the program itself, the analyst believes Trump's tweets are a message to the broader contractor community to keep costs down. He reiterated a Neutral rating on Lockheed's shares. Also commenting on the President-elect's tweet, Deutsche Bank analyst Myles Walton noted that Boeing's F-18 will not be procured by the Air Force and it cannot perform the STOVL mission desired by the Marines, leaving the Navy's procurement plan for 369 F-35Cs through the early 2030s as the source of debate. Moreover, the analyst believes the idea of "comparable" performance is not going to happen given the F-35's low observable and electronic warfare capabilities. With Trump wanting "wins" quickly, the negotiating "dance" will not go on forever, he contended. Walton reiterated a Buy rating and $300 price target on Lockheed's shares.

WHAT'S NOTABLE: Trump called for "greatly" strengthened, expanded nuclear capability in another tweet. "The United States must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes," he stated.

PRICE ACTION: On Friday, shares of Lockheed dropped over 1% to $249.59, while Boeing's stock closed up slightly at $157.81. "Trump Effect" is The Fly's recurring series of exclusive stories that highlight stocks that are being impacted, or are predicted to be impacted, by the comments, actions and policies of President-elect Trump and his administration.