AnalystConsensusTarget updated the narrative for LMT

Lockheed Martin's analyst fair value estimate has been raised from $493.71 to $516.56 per share as analysts note stronger order growth and improved profitability. This is partially offset by operating challenges and a mixed defense outlook.

Analyst Commentary

Analyst adjustments to Lockheed Martin’s price targets reflect growing optimism regarding the company’s order book and top-line growth, even as operational risks and sector uncertainties persist.

Bullish Takeaways

• Bullish analysts are raising price targets in response to strong order activity, particularly for the F-35, CH-53K, PAC-3, and other flagship programs.
• Upgrades in ratings suggest improving sentiment about Lockheed Martin’s potential for growth in core defense operations.
• Positive outlooks for Q3 top-line performance are linked to robust demand in both defense and aftermarket channels.
• Passenger travel recovery and increased engine shop visits support aftermarket demand, boosting the company’s overall growth prospects.

Bearish Takeaways

• Bearish analysts note ongoing operational challenges in Aeronautics, MFC, and RMS divisions, which have led to recent financial charges.
• Stabilization of performance on fixed-price development programs remains a key uncertainty for near-term earnings results.
• Sector-wide concerns, including government shutdown risks, create a more nuanced outlook for defense spending in the coming quarters.
• Aircraft supply chain constraints and potential volatility in the defense budget are possible headwinds for sustained execution.

What's in the News

• The Pentagon has asked missile makers, including Lockheed Martin, to dramatically increase production due to concerns over a potential future conflict with China (The Wall Street Journal).
• Defense Secretary Pete Hegseth has called an urgent meeting of top U.S. military commanders, with major defense contractors like Lockheed Martin under focus (The Washington Post).
• Turkey is negotiating to buy hundreds of aircraft from Boeing and Lockheed Martin and is seeking local production agreements valued at over $10 billion (Bloomberg).
• Recent U.S.-China tensions have led China to restrict exports of critical minerals. These minerals are essential for defense manufacturers like Lockheed Martin, and the restrictions are delaying production (The Wall Street Journal).
• The U.S. is moving to relax export restrictions on military drones, which could potentially benefit drone makers such as Lockheed Martin (Reuters).

Valuation Changes

• The Fair Value Estimate has risen to $516.56 per share, up from the previous estimate of $493.71.
• The Discount Rate has increased slightly from 8.06% to 8.11%.
• The Revenue Growth forecast has declined from 3.87% to 3.24%.
• The Net Profit Margin is now estimated at 8.86%, a small improvement over the previous 8.79%.
• The Future P/E Ratio has edged up from 19.64x to 19.81x.