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Investing.com - UBS lowered its price target on Lockheed Martin (NYSE:LMT) to $453.00 from $498.00 while maintaining a Neutral rating on the aerospace and defense contractor’s stock. The stock, currently trading near its 52-week low at $418.92, has declined nearly 13% in the past week. According to InvestingPro analysis, the company appears undervalued based on its Fair Value estimates.
The price target reduction follows multiple larger-than-expected charges that have affected Lockheed Martin’s financial performance, raising concerns about the company’s challenged fixed-price programs that have impacted its profit and loss statement over recent years. Despite these challenges, the company maintains a 3.2% dividend yield and has raised its dividend for 22 consecutive years.
UBS noted that Lockheed’s largest program, the F-35 fighter jet, faces budget cuts, while the company has lost several recent high-profile defense contract competitions, including Next (LON:NXT) Generation Air Dominance (NGAD) and Future Long-Range Assault Aircraft (FLRAA).
The investment firm also highlighted pension headwinds and classified cash drag as factors limiting Lockheed Martin’s free cash flow growth over the near term.
These combined challenges make it difficult to justify a higher valuation for the defense contractor, according to UBS’s analysis of Lockheed Martin’s business outlook.
In other recent news, Lockheed Martin Corporation reported its financial results for the second quarter of 2025, revealing a significant earnings per share (EPS) miss. The company posted an EPS of $1.46, which was considerably below the forecasted $6.54, marking a surprise miss of 77.68%. Revenue also came in below expectations at $18.2 billion, compared to the anticipated $18.58 billion. Following these results, Truist Securities downgraded Lockheed Martin from Buy to Hold, citing significant charges totaling $1.8 billion in the quarter. Similarly, Vertical Research Partners lowered its price target for the company to $460.00 from $505.00, maintaining a Hold rating due to ongoing challenges such as the Next Generation Air Dominance competition losses and the departure of its Chief Financial Officer. Additionally, Fitch Ratings assigned an ’A’ rating to Lockheed Martin’s proposed senior unsecured notes offerings. The company plans to use the net proceeds from these notes for general corporate purposes, including the repayment of upcoming unsecured debt maturities. These developments highlight a challenging period for Lockheed Martin, as reflected in the analyst downgrades and financial results.
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