Truist maintains Lockheed stock Buy rating despite NGAD loss

On Monday, Truist Securities maintained their Buy rating and $579.00 price target for Lockheed Martin (NYSE:LMT) shares, despite the company’s recent setback in the defense sector. According to InvestingPro data, Lockheed Martin, a prominent player in the Aerospace & Defense industry, is currently trading at $439.70, suggesting potential upside based on analyst targets ranging from $418 to $685. The White House selected Boeing (NYSE:BA, NR) as the winner of the Next (LON:NXT) Generation Air Dominance (NGAD) contract for the U.S. Air Force, a significant contract valued at over $20 billion for engineering and development alone.

Boeing’s victory comes after a challenging year marked by a labor strike and disruptions in plane production. This contract win signifies the end of Lockheed Martin’s exclusive role as the prime contractor for U.S. fighter aircraft production, including the F-22 Raptor and F-35.

Lockheed Martin’s stock experienced a decline of approximately 6% following the announcement of the NGAD contract decision, with InvestingPro data showing the stock trading near its 52-week low of $419.70. The loss of the potential multi-billion dollar contract is seen as a blow to the company’s dominance in the fighter aircraft market, though the company maintains strong fundamentals with a market capitalization of $103.5 billion.

Despite this, Truist Securities analyst Michael Ciarmoli remains positive on Lockheed Martin’s outlook. Ciarmoli estimates that, had Lockheed Martin secured the NGAD program and executed it without major issues, the project could have been worth around $4-5 billion to the company when considering a 20-year period. The NGAD program is set to replace the F-22 Raptor with a manned aircraft that can operate alongside drones and features advanced sensors and stealth capabilities. For deeper insights into Lockheed Martin’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

In other recent news, Lockheed Martin has faced a series of competitive challenges that have affected its growth outlook. Melius Research downgraded Lockheed Martin’s stock rating from Buy to Hold, citing increased competition and geopolitical shifts that could limit export opportunities. The company lost several key defense contracts to competitors like Northrop Grumman (NYSE:NOC), Raytheon (NYSE:RTN), and Textron (NYSE:TXT), which has led Melius to lower their sales growth assumptions and reduce their price target for Lockheed Martin shares from $603 to $483. Despite these setbacks, Lockheed Martin is in ongoing negotiations with Turkey’s defense ministry regarding a $23 billion sale of F-16 fighter jets and modernization kits, which could influence U.S. sanctions and sales decisions.

Additionally, Lockheed Martin’s integration of its AN/TPQ-53 multi-mission radar with the Joint Task Force – Southern Border command and control systems has enhanced U.S. border capabilities. The radar’s open architecture design allows for seamless integration with various systems, supporting the U.S. Northern Command’s mission. Meanwhile, the company is awaiting a significant announcement regarding the Next Generation Air Dominance contract, which could reinforce its position as a leading defense contractor. In Canada, Bombardier (OTC:BDRBF)’s CEO expressed concerns that the cancellation of a C$19 billion contract for Lockheed Martin F-35 fighter jets could impact Bombardier’s U.S. contracts, highlighting the interconnected nature of defense deals. These developments reflect the dynamic landscape Lockheed Martin is navigating amid heightened competition and evolving international relations.

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