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Investing.com - TD Cowen downgraded Lockheed Martin (NYSE:LMT) from Buy to Hold on Thursday, while maintaining a price target of $480.00. The aerospace giant, with a market capitalization of $108.49 billion and annual revenue of $71.81 billion, remains a prominent player in the Aerospace & Defense industry according to InvestingPro data.
The downgrade comes amid persistent concerns surrounding Lockheed’s F-35 fighter jet program. TD Cowen noted that implementation of the TR3 software upgrade to make F-35 aircraft combat capable is expected to continue until the first half of 2026, impacting cash collections.
The Department of Defense’s fiscal 2026 budget request reduces the Air Force’s expected F-35 purchase by 20 aircraft, creating uncertainty about future procurement levels. Advanced procurement disclosures suggest lower F-35 purchases may continue beyond fiscal 2026.
TD Cowen highlighted potential execution risks that could limit upside to consensus estimates. The firm specifically mentioned possible second-quarter charges in Lockheed’s Aeronautics segment due to the Next (LON:NXT) Generation Air Dominance (NGAD) program loss and cost overruns on a classified program.
The research firm also noted that Lockheed did not sign the F-35 Lot 18/19 contract in the second quarter, representing a negative $1 billion free cash flow difference compared to Street estimates, which could lead to reduced guidance for calendar year 2025.
In other recent news, Lockheed Martin has secured a significant 10-year contract valued at nearly $3 billion for the Aegis Ballistic Missile Defense system, according to the U.S. Department of Defense. This agreement involves maintaining the operational relevancy of the system and includes design, development, and integration work. Additionally, Lockheed Martin has been awarded three U.S. Navy contracts totaling approximately $101.5 million for naval combat systems and equipment, with the largest being a $78.4 million modification for undersea warfare combat systems. The company also received a $45.9 million contract to convert Long-Range Anti-Ship Missiles for the U.S. military, increasing the total contract value to $1.21 billion. In other developments, Lockheed Martin has been identified by Bernstein analyst Douglas S. Harned as a potential beneficiary in the FY2026 defense budget proposal, particularly in Space Force funding and missile defense programs. However, the company may face challenges with downward pressure on certain programs such as the F-35. Furthermore, Turkish President Tayyip Erdogan has expressed Turkey’s ongoing interest in rejoining the F-35 fighter jet program after discussions with U.S. President Donald Trump.
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