TD Cowen has adjusted its outlook on Lockheed Martin (NYSE: NYSE:LMT), raising the aerospace and defense company's price target from $560.00 to $610.00.
The firm maintained a Buy rating on the stock. The price target increase follows Lockheed Martin's reported earnings per share (EPS) for the third quarter, which surpassed analyst expectations.
However, the company's medium-term sales growth forecast is considered modest compared to the market's expectations for mid-single-digit percentage growth.
The analyst at TD Cowen highlighted Lockheed Martin's position as a leading company in the defense sector and pointed to its international sales and short-cycle leverage, particularly within its Missiles and Fire Control (MFC) business, as reasons for favoring the stock.
The revised price target of $610.00 is based on approximately 19 times the calendar year 2025 enterprise value to earnings before interest, taxes, depreciation, amortization, and pension (EV/EBITDAP) multiple.
Lockheed Martin's third-quarter performance, which outpaced Wall Street's predictions, has contributed to the analyst's positive outlook. Despite the company's medium-term guidance suggesting lower-than-expected sales growth, the firm's standing and potential in the defense industry appear to underpin the analyst's confidence in the company's stock.
In other recent news, Lockheed Martin's third-quarter earnings exceeded expectations with an adjusted earnings per share (EPS) of $6.84, surpassing the $6.39 estimate. However, the company's total revenue of approximately $17.1 billion fell slightly short.
Despite these results, Susquehanna, RBC Capital, and Deutsche Bank have revised their price targets for the company, maintaining positive ratings. Furthermore, Goldman Sachs has reiterated a Sell rating, citing potential slowdown in organic revenue growth.
Recent developments include Lockheed Martin raising its profit and sales outlook for 2024, projecting a profit per share of $26.65 and full-year sales of $71.25 billion. This comes despite concerns in the Aeronautics segment and a 3% drop in sales in the third quarter. The company's board has also authorized an increase in its quarterly dividend and a $3 billion expansion of its share repurchase program.
In addition, Lockheed Martin has appointed Chauncey McIntosh as the new vice president and general manager of the F-35 Lightning II Program. The company also reported a record backlog of $165 billion at the end of the third quarter, which is expected to drive free cash flow growth in the upcoming years.
InvestingPro Insights
Lockheed Martin's strong market position, as highlighted in the article, is further supported by recent InvestingPro data and tips. The company's market capitalization stands at an impressive $136.17 billion, underscoring its significant presence in the Aerospace & Defense industry.
InvestingPro Tips reveal that Lockheed Martin has maintained dividend payments for 41 consecutive years and has raised its dividend for 22 consecutive years. This consistent dividend policy aligns with the company's stable financial performance mentioned in the article and may appeal to income-focused investors.
The company's P/E ratio of 22.21 and its adjusted P/E ratio of 20.0 for the last twelve months as of Q3 2024 suggest that investors are willing to pay a premium for Lockheed Martin's earnings, possibly due to its strong market position and growth prospects in the defense sector. This valuation metric complements the analyst's positive outlook and price target increase discussed in the article.
It's worth noting that InvestingPro offers 14 additional tips for Lockheed Martin, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights could be particularly valuable given the company's recent earnings beat and the analyst's optimistic stance on its international sales and short-cycle leverage.
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