Lockheed Martin (LMT) shares rose 3.3% by Wednesday afternoon after Vertical Research initiated coverage with a buy rating and a $600 price target. Earlier, Bernstein cut its price target to $564, citing worries about defense funding delays in Congress and an uncertain budget path. Vertical Research analyst Robert Stallard argues that spending on air-defense missiles looks secure, since the Iran war severely depleted Patriot stockpiles and Lockheed builds the Patriot. The stock is down 23% from its earlier-year highs and 14% over the past two months, and it trades below 20 times earnings with a 2.9% dividend yield and expected annual earnings growth above 17% over five years. The author says the price looks right to him.
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- Lockheed Martin's $230 Billion Backlog, Explained
Lockheed Martin's backlog stands at $230 billion, nearly $37 billion above the end of 2025 and about 2.8 times the midpoint of its 2026 revenue guidance of $80.75 billion. Almost all of the increase came from the missiles and fire control (MFC) segment, which carries the company's highest profit margin, suggesting improving backlog margins. Growth was driven by mature systems, including a $35 billion THAAD interceptor award in June and a $4.7 billion PAC-3 contract, where the main risk is manufacturing at scale rather than development. A $53.86 billion PAC-3 order placed after the second quarter is not included in the $230 billion figure. The author concludes the backlog is lower-risk and potentially higher-margin than in past years, supporting the investment case.
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UBS analyst Gavin Parsons upgraded Lockheed Martin to “buy” with a $674 price target, implying 26% upside, as sales of missiles, munitions, F-35 fighters, helicopters and Trident missiles drive 9% sales growth over the next few years. The stock rose another 2.5% by 1:10 p.m. ET, its third straight gain. In a new note, Parsons reiterated that the Missiles and Fire Control (MFC) division could grow 150% in size over five years, with sales rising 20% annually through 2030, and PAC-3, THAAD and JASSM/LRASM adding $7bn, $5bn and $3bn respectively. UBS says few investors expect such growth, so Lockheed could keep delivering positive earnings surprises. MFC's 13% operating margin, above the company's 10.7%, suggests profits could grow faster than the 17% Wall Street expects, and the author considers the stock attractive at under 20 times earnings.
- Here Are Wednesday's Top Wall Street Analyst Research Calls: Albemarle, Alcoa, Brinker International, Dell Technologies, Garmin, Hewlett Packard Enterprise, Lockheed Martin, NetApp, Trane Technologies, and More
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