Last Update 23 Jun 26

LMT: Defense Backlog And Missile Capacity Expansion Will Drive Future Upside Potential

Lockheed Martin's updated analyst price target is now $571. This reflects analysts' recent model revisions for the aerospace and defense sector and a more cautious stance regarding the timing of any broad sector recovery.

Analyst Commentary

Recent research on Lockheed Martin reflects a mix of optimism around long term positioning and caution around sector timing. This directly affects how analysts think about valuation, execution risk, and growth visibility.

Bullish Takeaways

Bullish analysts see the recent sector selloff as creating potential entry points, with Lockheed Martin viewed as a core aerospace and defense holding when sentiment improves.
The updated US$571 target is framed within expectations that aerospace could recover ahead of defense. This supports a view that Lockheed Martin’s exposure to that group can help underpin valuation over time.
Earlier upward revisions to price targets this year signal that some analysts see room for improved execution or visibility in certain programs. They factor this into their models as supportive for long term growth assumptions.
The presence of multiple research updates in a short period keeps the stock under close institutional review. Bullish analysts often view this as helpful for price discovery and for anchoring valuation to new information.

Bearish Takeaways

Several recent price target cuts highlight more conservative assumptions around sector recovery, with analysts explicitly pushing back on the idea of a rapid, V shaped rebound for aerospace and defense.
Neutral ratings, even after model revisions, show that some bearish analysts are not yet comfortable underwriting faster growth. This can limit how high they are willing to set valuation multiples for Lockheed Martin.
Caution around unresolved geopolitical risks, including the Middle East conflict, feeds into more muted expectations for the timing of any broad rerating in defense stocks, keeping target prices anchored closer to current levels.
The shift from earlier target increases to more recent reductions suggests that analysts are recalibrating their models toward tighter execution and growth assumptions. This can weigh on upside scenarios investors might have previously considered.

What’s in the News for Lockheed Martin

Lockheed Martin stock recently fell about 4.05% to 4.90% after an interim US–Iran peace deal, as investors weighed the possibility of softer near term weapons demand alongside company specific issues such as margin compression, production delays in key aeronautics programs, and recent earnings and revenue misses that have led some analysts to cut earnings forecasts. (Source: interim US–Iran agreement and earnings coverage)
The company secured nearly US$10b in new defense contracts, including PAC 3 missiles, F 35 deliveries and sustainment, MH 60R Seahawk helicopters, and air to surface missiles for allies such as New Zealand and Denmark, while its backlog stood at about US$186.4b as of March 2026 and the stock traded around 24% below its 52 week high. (Source: “Lockheed Martin Secures Nearly $10 Billion in Defense Contracts”)
Lockheed Martin and General Motors announced a partnership aimed at scaling U.S. defense manufacturing capacity, with Lockheed Martin planning to invest US$9b through 2030 to modernize facilities and strengthen supply chains as it continues to win contracts in areas such as GPS, SONAR, F 35 sustainment and missile programs. (Source: GM and Lockheed Martin collaboration coverage)
The company is rapidly expanding missile and munitions production, including new facilities in Alabama and upgrades at more than 20 U.S. sites, as it works to increase output for systems like THAAD, PAC 3, PrSM and Next Generation Interceptor, while also supporting a backlog of roughly US$186b and securing additional logistics and repair contracts for Patriot systems. (Source: “Lockheed Martin Accelerates Missile Production and Secures Major Contracts”)
Lockheed Martin reported operational challenges in meeting surging demand for Patriot PAC 3 MSE interceptor missiles, with plans to roughly triple annual output to around 2,000 units by the end of the decade, while supply chain constraints create uncertainty around delivery timelines for U.S. allies. (Source: “Lockheed Martin Struggles to Meet Growing Demand for Patriot Missiles”)

Valuation Changes for Lockheed Martin

Fair Value: Model fair value remains at $625.16 per share, with no change between the prior and updated estimates.
Discount Rate: Discount rate has risen slightly from 8.31% to 8.34%, implying a modestly higher required return in the updated model.
Revenue Growth: Revenue growth assumption holds essentially steady at about 5.44% in both the prior and updated forecasts.
Net Profit Margin: Net profit margin assumption is broadly unchanged at about 9.11% in the updated Lockheed Martin model.
Future P/E: Future P/E multiple is 22.0x in both the prior and updated model, indicating only a negligible adjustment to how earnings are valued in the refreshed analysis.

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Key Takeaways

Robust demand for advanced defense platforms and technologies, driven by geopolitical tensions and operational success, is fueling sustained revenue and backlog growth.
Enhanced risk management, ongoing efficiency initiatives, and strong investment in next-generation technologies are expected to support margin recovery and long-term earnings stability.
Cost overruns, reliance on legacy programs, budget uncertainty, regulatory risks, and intensifying competition threaten margins, cash flow, revenue growth, and long-term competitiveness.

Catalysts

About Lockheed Martin

An aerospace and defense company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide.What are the underlying business or industry changes driving this perspective?

Demand for advanced platforms such as the F-35, PAC-3, THAAD, and hypersonic weapons is being reinforced by actual combat use and rising geopolitical tensions, with multiple U.S. and international customers increasing orders and strong backlog growth likely, positioning Lockheed Martin for robust top-line (revenue) growth going forward.
Lockheed Martin's technological leadership in areas like stealth, electronic warfare, hypersonics, and integrated air/missile defense systems is being validated by operational success and customer priorities, supporting future contract wins and an expanding addressable market, which should lift revenues and provide opportunities for higher-margin, next-generation products.
The growing focus on homeland defense initiatives such as "Golden Dome," missile warning networks, and increased munitions spending suggests future secular increases in U.S. defense budgets and multi-year, high-value contract awards that are likely to contribute meaningfully to backlog, revenue visibility, and cash flow stability.
Recent program charges and process improvements have led to enhanced risk management, contract discipline, and cost controls, which-combined with ongoing digital transformation and operational efficiency drives-are expected to support future margin recovery and improved earnings growth in the medium term.
Lockheed Martin continues to invest heavily in R&D and next-generation technologies, enabling it to maintain technological leadership and diversify future revenue streams, further supported by public-private partnerships (e.g., rare earth magnet supply chain), all of which should underpin sustainable earnings and cash flow growth over the long term.

Lockheed Martin Earnings and Revenue Growth

Lockheed Martin Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Lockheed Martin's revenue will grow by 5.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 6.4% today to 9.1% in 3 years time.
Analysts expect earnings to reach $8.0 billion (and earnings per share of $35.42) by about June 2029, up from $4.8 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 22.0x on those 2029 earnings, down from 23.7x today. This future PE is lower than the current PE for the US Aerospace & Defense industry at 40.2x.
Analysts expect the number of shares outstanding to decline by 1.24% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.34%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Significant financial charges ($1.8 billion in Q2 2025) across major legacy programs, especially on complex fixed-price contracts, reveal persistent cost overruns, design, integration, and test challenges-creating risk of further profit compression and potential future earnings downgrades.
Ongoing reliance on and challenges within large classified and legacy programs (e.g., Aeronautics Classified, Sikorsky's TUHP and CMHP) could constrain top-line growth if technical or contractual issues continue, while limited revenue diversification raises the risk of stagnating or contracting core revenues.
Exposure to changing U.S. and allied defense budgets-including recent signals of reduced F-35 procurement requests and increases in alternative priorities (e.g., B-21 program, nuclear modernization)-poses risk to future contract awards and may impact revenue growth if defense spending priorities shift.
Regulatory and legal headwinds, such as the $4.6 billion tax dispute with the IRS, introduce uncertainty and could result in significant cash outflows or increased tax liability, negatively impacting free cash flow and net income in the medium term.
Intensifying competition and shifting industry profit pools-toward commercial space, hypersonics, counter-UAS, and integrated platform-centric or software-based solutions-may erode Lockheed Martin's share of traditional military hardware contracts, threatening both margins and future earnings if innovation and adaptation lag competitors.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $625.16 for Lockheed Martin based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $756.0, and the most bearish reporting a price target of just $511.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $88.0 billion, earnings will come to $8.0 billion, and it would be trading on a PE ratio of 22.0x, assuming you use a discount rate of 8.3%.
Given the current share price of $493.6, the analyst price target of $625.16 is 21.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Raise Lockheed Martin Target Amid Strong Orders and Sector Challenges