Update shared on 04 Dec 2025
Analysts have modestly raised their price targets on Lockheed Martin, with recent increases to $500 and $545 per share reflecting stronger order momentum in key programs and resilient aerospace demand, even as operational challenges and a higher discount rate temper the potential upside.
Analyst Commentary
Street research heading into the Q3 print reflects a balanced mix of optimism around Lockheed Martin's growth prospects and caution around execution risks and the broader defense spending backdrop.
Bullish Takeaways
- Bullish analysts highlight robust order momentum across flagship programs such as the F-35, CH-53K, and PAC-3, supporting a healthier multi-year revenue growth profile and underpinning the recent price target increases.
- Expectations for solid top line growth in Q3 are seen as a validation of the backlog quality, with recurring demand in core platforms reinforcing confidence in the durability of cash flows and long term valuation support.
- Improving sentiment toward aerospace OEM production and continued strength in aftermarket demand are viewed as tailwinds for the broader sector, which could translate into a more favorable multiple for Lockheed Martin if execution stabilizes.
- Analysts point to incremental visibility on new awards and international demand as potential catalysts that could help close the perceived valuation gap relative to other high quality defense and aerospace names.
Bearish Takeaways
- Bearish analysts remain focused on operational challenges in Aeronautics, Missiles and Fire Control, and Rotary and Mission Systems, warning that recent charges on fixed price development programs highlight ongoing execution risk that could pressure margins.
- Stabilizing performance on complex, fixed price contracts is seen as a key hurdle, with any further delays or cost overruns potentially limiting upside to earnings estimates and justifying a more cautious stance on valuation.
- Uncertainty around U.S. budget negotiations, including the risk of a government shutdown, is viewed as an overhang on near term defense spending visibility and could weigh on investor appetite for the shares into Q4 and the FY26 outlook.
- Some analysts argue that, despite the recent price target hikes, the risk reward remains balanced given execution headwinds and macro budget risks, supporting more neutral ratings even as the fundamental demand picture remains constructive.
What's in the News
- President Trump signaled support for allowing the U.S. to sell F-35 stealth fighters to Saudi Arabia, potentially expanding a key export program for Lockheed Martin (Bloomberg).
- The Pentagon is urging major missile suppliers, including Lockheed Martin, to double or even quadruple production of high demand missiles amid concerns about a potential future conflict with China (The Wall Street Journal).
- Turkey is pursuing large scale purchases of Lockheed Martin fighter jets alongside Boeing airliners, while seeking local coproduction deals worth more than $10 billion to offset payments for U.S. aircraft (Bloomberg).
- Turkey could order up to 250 Boeing planes and additional Lockheed Martin F-16 fighter jets, with the potential deals tied to U.S.-Turkey talks over F-35 sales and broader defense relations (Bloomberg).
- Defense Secretary Pete Hegseth has called an urgent in person meeting of top U.S. military commanders, spotlighting elevated Pentagon focus on force readiness and the defense industrial base that includes Lockheed Martin (The Washington Post).
Valuation Changes
- Fair Value Estimate remains unchanged at approximately $528 per share, suggesting no material revision to the intrinsic value assessment.
- The Discount Rate has risen slightly from about 7.89 percent to roughly 8.18 percent, implying a modestly higher required return and marginally lower valuation support.
- Revenue Growth is effectively unchanged at around 3.65 percent annually, indicating steady expectations for top line expansion.
- Net Profit Margin is essentially flat at roughly 8.84 percent, reflecting stable assumptions for long term profitability.
- Future P/E has been nudged higher from about 20.11x to approximately 20.27x, signaling a slightly richer multiple applied to forward earnings.
Disclaimer
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