A GOP sweep has led to strong gains for defense stocks in the past. If such a landslide were to occur this time, however, that may not be the case. Defense has historically outperformed when there’s been a single party in control across Congress and the executive branch — in particular, the Republican Party, according to Wells Fargo analyst Matthew Akers. The sector outperforms the S & P 500 by more than 12 percentage points under a GOP-controlled government, he noted. Under a Democrat-led government, it beats the broad market index by nearly 6 percentage points. Polls indicate former President Donald Trump currently holds an edge in the election against President Joe Biden. However, Akers believes the defense sector may not benefit if there’s a Republican sweep this election cycle. Trump’s NATO-skeptic outlook could imply decreased weapons funding for Ukraine, according to the analyst. Republican control of both branches of the legislative branch also could result in budget cuts for federal IT revenue — which, to be sure, Akers said might be difficult unless there is a stronger Republican majority than polls currently suggest. “Even with a majority, R leaders would need to thread the needle between [the] House Freedom Caucus on the right, and enough Senate Democrats on the left (40+) to filibuster budgets without an equitable non-defense funding split. Another two years of low growth for both defense and non-defense looks likely to us,” Akers wrote in a Tuesday note. The likelihood of further tariffs against China under a Trump administration could also negatively impact Boeing. “Aircraft are large, visible export items from the U.S. to China, and have emerged as a target in ongoing trade tensions between the countries,” according to Akers. TD Cowen thinks the opposite scenario is likely, however. The firm said a Trump presidency is positive for the defense sector. Although the firm agrees overseas defense and emergency spending could fall, it thinks it won’t go away entirely. “We think the prospects for defense companies (top-line growth & transition from development work to production) are better than expected,” TD Cowen wrote in a note. The firm cited the Republican Party’s platform, which highlights a “strong military,” restoring peace and “made in America” defense systems. The iShares U.S. Aerospace & Defense ETF (ITA) has lagged the broader market this year, rising just 7.7% — while the S & P 500 is up 18%. ITA .SPX YTD mountain ITA year to date