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Investing.com - Bernstein analyst Douglas Harned reduced the price target on Lockheed Martin (NYSE:LMT) to $467.00 from $551.00 on Thursday, while maintaining a Market Perform rating following the company’s challenging second-quarter results. The aerospace and defense giant, currently trading at $425.50, has seen its stock decline over 10% in the past week, with InvestingPro data indicating the shares are trading near their 52-week low.
The defense contractor reported second-quarter earnings per share of $1.46 on Tuesday, significantly below the consensus estimate of $6.39, due to substantial one-time charges. These included a $950 million charge on a classified Aeronautics program and combined charges of $665 million on two Sikorsky helicopter programs. Despite these challenges, the company maintains a solid dividend yield of 3.15% and has raised its dividend for 22 consecutive years, according to InvestingPro data.
Sales for the quarter reached $18.2 billion, falling short of the $18.5 billion consensus, as the charges effectively resulted in revenue debooking. The analyst noted that while an Aeronautics charge was anticipated, its magnitude was unexpected.
The classified Aeronautics program is expected to continue for at least the next 3-4 years with zero margins, while issues with the larger helicopter program, identified as the Canadian Maritime Helicopter, have persisted for more than a decade and will continue to impact Sikorsky’s performance for several years.
Bernstein expressed caution about Lockheed Martin’s new program monitoring process, indicating a desire to see a proven track record before taking a more positive stance on the stock, despite strong demand in the company’s Missiles & Fire Control division.
In other recent news, Lockheed Martin’s second-quarter 2025 results have led to significant financial adjustments and analyst reactions. The company reported approximately $1.6 billion in program losses, resulting in a 78% miss in earnings per share compared to expectations. This has prompted RBC Capital to lower its price target for Lockheed Martin to $440, maintaining a Sector Perform rating. UBS also reduced its price target to $453 due to larger-than-expected charges impacting the company’s financial performance, while maintaining a Neutral rating. Truist Securities downgraded the stock from Buy to Hold, citing $1.8 billion in charges that were broader in scope than anticipated. Vertical Research Partners adjusted its price target to $460, highlighting ongoing challenges, including the loss of the Next (LON:NXT) Generation Air Dominance competition and the departure of the Chief Financial Officer. Additionally, Fitch Ratings assigned an ’A’ rating to Lockheed Martin’s proposed senior unsecured notes, which will be used for general corporate purposes. These developments reflect a period of financial and operational challenges for the defense contractor.
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