Lockheed Martin (LMT – Research Report), the Industrials sector company, was revisited by a Wall Street analyst yesterday. Analyst Douglas Harned from Bernstein remains neutral on the stock and has a $482.00 price target.
Geoff Meacham has given his Hold rating due to a combination of factors that influence Lockheed Martin’s current financial outlook and future projections. The company’s fourth-quarter earnings per share and sales were reported to be higher than consensus estimates, which is a positive indicator. However, the margins in the same period were lower than expected. Moreover, while Lockheed Martin’s sales guidance for 2024 appears solid, primarily driven by its Missiles & Fire Control segment, the earnings per share and free cash flow guidance fell below consensus, which raises some concerns about profitability and cash generation. Despite typically conservative guidance from the company, particularly regarding free cash flow, there are still uncertainties that temper the enthusiasm for the stock, leading to a revised target price reduced from $507 to $482.
The challenges particularly revolve around the F-35 program, which accounts for about 30% of the company’s sales. Technical upgrades have been difficult, and there is potential for further delays, which could impact production rates and margins. Additionally, while classified work within the Aeronautics sector has contributed to revenue growth, it has also had a dilutive effect on margins. Although the Missiles & Fire Control segment is showing strong revenue growth, a classified program continues to pressure the overall margins of Lockheed Martin. Despite expectations for these margin headwinds to decrease over time, the current outlook requires a cautious stance, leading to the Hold rating for the company’s stock.
Harned covers the Industrials sector, focusing on stocks such as Boeing, Airbus Group SE, and Huntington Ingalls. According to TipRanks, Harned has an average return of 5.9% and a 55.13% success rate on recommended stocks.
In another report released yesterday, Deutsche Bank also maintained a Hold rating on the stock with a $465.00 price target.
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Lockheed Martin (LMT) Company Description:
Headquartered in Bethesda, Maryland, Lockheed Martin Corp. is a global security and aerospace company and is engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The majority of Lockheed Martin’s business is with the U.S. Department of Defense and U.S. federal government agencies. Lockheed Martin’s business is also comprised of international government and commercial sales of products, services and platforms. The company’s operating units are divided into four categories including, Aeronautics, Missiles and Fire Control, Rotary and Mission Systems and Space Systems.
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