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On Wednesday, RBC Capital Markets adjusted its financial outlook for Lockheed Martin (NYSE:LMT), a major aerospace and defense contractor currently trading at $460.48. The firm’s analyst, Ken Herbert, reduced the price target on the company’s shares to $550 from the previous $570, while continuing to endorse the stock with an Outperform rating. According to InvestingPro data, the stock has experienced an 8.4% decline over the past week, presenting a potential opportunity for investors seeking exposure to the aerospace sector.
Lockheed Martin recently disclosed its fourth-quarter earnings for the year 2024, reporting an adjusted earnings per share (EPS) of $7.45. This figure surpassed both RBC Capital’s estimate of $6.52 and the consensus estimate of $6.62. However, the company’s revenue fell slightly short of expectations, coming in at $18.6 billion, a 1% miss compared to estimates. The company maintains strong fundamentals, with InvestingPro analysis showing a 22-year streak of consecutive dividend increases and a current dividend yield of 2.89%.
The financial results were impacted by significant operating losses in development programs, particularly within the Aeronautics segment. These losses, which were not anticipated by investors, contributed to a total segment operating income of $426 million for the quarter.
Herbert remarked on the company’s financial performance, indicating that the unexpected charges in the Aeronautics division were a judicious step considering the low expectations investors had for Lockheed Martin’s stock. Nonetheless, he noted that the broader negative sentiment surrounding defense spending exerted additional pressure on the company’s shares.
Despite the challenges faced in the fourth quarter of 2024, RBC Capital maintains a positive view on Lockheed Martin’s valuation. The firm believes the stock remains attractive for investors, which is reflected in the continuation of the Outperform rating, though the price target has been adjusted to reflect the recent developments. InvestingPro’s comprehensive analysis indicates the stock is currently trading near its Fair Value, with a "GOOD" overall financial health score. Subscribers can access 12 additional exclusive ProTips and detailed valuation metrics in the Pro Research Report.
In other recent news, Lockheed Martin faced a series of significant developments. The company’s stock target was reduced to $519 by Vertical Research Partners due to concerns over the long-term impact of fixed price development contracts. Despite this, RBC Capital and Truist Securities maintained a positive outlook on the defense contractor’s shares, setting their price targets at $570 and $579 respectively.
Meanwhile, Lockheed Martin has been grappling with the fallout of an F-35 fighter jet crash during a training exercise in Alaska. Jefferies strategist Siddhartha Sandilya commented on the event, noting its potential implications for the company’s stock performance.
Lockheed Martin also announced a quarterly dividend of $3.30 per share for the first quarter of 2025, continuing its 41-year record of consistent dividend payments. Additionally, the company began ground testing of a UH-60M Black Hawk helicopter equipped with the new GE Aerospace T901 Improved Turbine Engines, marking a significant milestone in the modernization of the U.S. Army’s helicopter fleet.
These recent developments reflect Lockheed Martin’s ongoing commitment to innovation and shareholder value, as the company navigates the challenges and opportunities in the global defense technology sector.
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