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Lockheed Martin stock target cut, retains outperform on mixed results

EditorNatashya Angelica
Published 2024/10/23, 18:10
LMT
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On Wednesday, RBC Capital adjusted its outlook on Lockheed Martin (NYSE:LMT) shares, reducing the price target to $665 from the previous $675 while reiterating an Outperform rating on the stock. The defense contractor's third-quarter adjusted earnings per share (EPS) of $6.84 exceeded RBC Capital's forecast of $6.33 and the consensus estimate of $6.50.

However, Lockheed Martin's total revenue for the quarter fell slightly short of expectations, coming in at approximately $17.1 billion, about 2% below estimates.

The company's total segment operating income saw an increase of just over 3% year-over-year. This growth was primarily driven by the Missiles and Fire Control (MFC) segment, which stands out as a positive indicator for the company's potential performance into 2025.

Lockheed Martin's F-35 program is reportedly progressing well in its recovery, and RBC Capital anticipates potential upside in the initial mid-term outlook based on this trend.

Despite the mixed results in revenue and earnings, RBC Capital remains confident in Lockheed Martin's performance. The firm's decision to maintain the Outperform rating indicates a belief in the company's strong fundamentals and future growth prospects. The slight adjustment in the price target reflects a recalibration in response to the quarter's financials while still signaling optimism about the stock's value.

Lockheed Martin's stock performance and future outlook will continue to be of interest to investors, particularly in light of the company's strategic importance in the defense sector and its ongoing projects, such as the F-35 fighter jet program. The MFC segment's robust performance is especially noteworthy as it may set the stage for future success and profitability.

In other recent news, Lockheed Martin has raised its profit and sales outlook for 2024, with an expected profit per share of $26.65 and full-year sales of $71.25 billion. This adjustment comes amidst challenges with the company's F-35 fighter jet program and a 3% drop in sales in the third quarter.

Meanwhile, Goldman Sachs has maintained a Sell rating on the company's shares, citing concerns about a potential slowdown in organic revenue growth and a flattening Department of Defense budget.

In related developments, Raytheon (NYSE:RTN) Technologies (NYSE:RTX) Corporation has also revised its 2024 profit and sales forecasts upwards, attributing the increase to robust demand for aircraft repairs and defense systems. The company now anticipates a full-year adjusted profit per share between $5.50 and $5.58 and revenue between $79.25 billion and $79.75 billion.

Furthermore, Australia has announced a $4.7 billion acquisition of SM-2 IIIC and SM-6 long-range missiles from the United States, enhancing its defense capabilities. Lockheed Martin has also appointed Chauncey McIntosh as the new vice president and general manager of the F-35 Lightning II Program.

Lastly, Deutsche Bank (ETR:DBKGn) has adjusted its price target for Lockheed Martin from $620.00 to $611.00, while maintaining a Buy rating. The company's board has authorized an increase in its quarterly dividend and a $3 billion expansion of its share repurchase program. These are some of the recent developments in the defense sector.

InvestingPro Insights

To complement RBC Capital's analysis, InvestingPro data offers additional insights into Lockheed Martin's financial health and market performance. The company's market capitalization stands at $136.17 billion, reflecting its significant presence in the Aerospace & Defense industry. Lockheed Martin's P/E ratio of 22.21 suggests that investors are willing to pay a premium for the company's earnings, which aligns with RBC Capital's optimistic outlook.

InvestingPro Tips highlight Lockheed Martin's strong dividend history, having raised its dividend for 22 consecutive years and maintained payments for 41 years. This demonstrates the company's commitment to shareholder returns, which may be particularly attractive to investors seeking stable income. Moreover, the company's management has been aggressively buying back shares, potentially indicating confidence in the company's value and future prospects.

The stock has shown robust performance, with a 15.74% price total return over the past three months and a substantial 26.96% return over six months. This aligns with RBC Capital's Outperform rating and suggests that the market is responding positively to Lockheed Martin's business developments, including the progress in the F-35 program mentioned in the article.

For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips on Lockheed Martin, providing a deeper understanding of the company's financial position and market dynamics.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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