LMT - Lockheed Martin's Q3 results spur changes in analyst ratings estimates

Lockheed Martin’s ( NYSE: LMT ) better-than-estimated Q3 earnings and bigger stock buyback plan led Wall Street analysts to assess the defense contractor’s outlook.

Analysts at Baird on Wednesday upgraded Lockheed to Outperform from Neutral, while other analysts provided commentary on the company:

“Lockheed Martin is clearly focused on being a cash return story, which we appreciate. In the current M&A environment, there is not much else they can do with their capital. While this strategy may have worked well for peers in the past during a declining defense budget environment, we are not convinced this strategy will be as effective for total shareholder returns in a growing defense budget environment.” – Ronald J. Epstein, Bank of America Securities (maintained Neutral rating and price target of $445)

“Lockheed Martin still has programs of record ramping over the next few years (including the F-35 and CH-53K), a few major development programs on the horizon that will be awarded soon, and avenues for upside from a global defense spending outlook that remains very promising. Investors will have to be a bit more patient to see these benefits, but the $14 billion buyback authorization, representing over 10% of the company, should help lead to interim EPS growth as it is utilized over the next few years.” – Charles P. Minervino, Susquehanna Financial Group (maintained Positive rating while lowering price target to $510 from $539)

“Lockheed Martin's growth will be limited due to a large share of its sales on flattish F-35, while RMS [rotary and mission systems] growth depends on the outcome of the upcoming Future Vertical Lift FLRAA contract award . On the other hand, many of Lockheed’s peers won't see much better defense growth, with recent budget upside unlikely to drive much incremental business before 2024.” - Matthew Akers, Wells Fargo Securities (maintained Underweight rating while raising price target to $417 from $415)

With its Q3 earnings announcement, Lockheed yesterday boosted its share repurchase plan by $14 billion, including a doubling of this year’s buybacks to $8 billion. Its stock jumped 8.7% on Tuesday for the biggest one-day gain since March 2020.

Seeking Alpha columnist Dhierin Bechai has a Buy rating on Lockheed Martin ( LMT ) on future sales of fighter jets and missiles, though he disagrees with the stock buyback plan . Contributor Leo Nelissen rates Lockheed Martin ( LMT ) as a Buy on its improved business outlook .

For further details see: