Last Update 09 Feb 26

Fair value Increased 15%

LMT: Sector Momentum And Policy Shifts Will Shape Future Risk Reward Balance

Analysts have lifted their price expectations for Lockheed Martin, with our fair value estimate moving from $569.68 to $652.53 as they factor in higher modeled revenue growth, slightly stronger profit margins, a marginally lower discount rate, and a modestly higher future P/E, in line with a series of recent price target increases across the Street.

Analyst Commentary

Street research on Lockheed Martin has been active, with most recent notes centered on refreshed models, updated P/E assumptions, and shifting views on how policy moves and sector trends could feed into valuation. Here is how bullish and bearish analysts are framing the risk and reward trade off.

Bullish Takeaways

Bullish analysts are lifting price targets by wide ranges, including triple digit moves in several cases, which signals higher conviction that current pricing does not fully reflect their revenue and earnings frameworks.
Multiple firms that updated aerospace and defense coverage reference sector momentum through at least the first half of 2026 and use that context to justify higher targets for Lockheed Martin as part of a broader group reset.
Some bullish analysts acknowledge concerns around margins and portfolio mix but still raise targets, indicating they see those risks as already well reflected in prior valuations relative to their updated forecasts.
There are cases where targets are raised while ratings stay Neutral or Hold. This suggests upside in their modeled fair value without a view that the shares are mispriced enough to warrant an outright positive rating.

Bearish Takeaways

Bearish analysts that lower targets or get more cautious point to margin risk and portfolio exposure as key reasons to temper expectations, especially when near term guidance could come in softer than some investors might hope.
Commentary around potential policy changes on buybacks and dividends adds another layer of uncertainty to capital return assumptions, which can weigh on how some models treat Lockheed Martin versus other defense primes.
Some more cautious views highlight that even with supportive sector headlines, Lockheed Martin may still face execution questions on revenue and EPS guidance for 2026, which can limit how far valuation multiples are stretched.
Where targets are trimmed rather than raised, the message is that recent sector enthusiasm and higher peer targets may already be reflected in the shares, leaving less room for upside if company level delivery does not fully match optimistic scenarios.

What's in the News

Lockheed Martin signed a framework agreement with the Department of War to increase Terminal High Altitude Area Defense interceptor production capacity from 96 to 400 units per year, and plans to build a new Munitions Acceleration Center in Camden, Arkansas to support THAAD, PAC 3 and other programs (Key Developments).
The company issued 2026 guidance, with expected sales of US$77.5b to US$80.0b, and diluted EPS of US$29.35 to US$30.25 (Key Developments).
Lockheed Martin reported additional progress on its long running share repurchase program, buying back 1,600,000 shares for US$750m in late 2025 under the authorization first announced in 2010 (Key Developments).
President Trump said he will allow the U.S. to sell F 35 aircraft to Saudi Arabia, according to Bloomberg. This keeps the F 35 program in the broader policy discussion around export markets (Bloomberg).
Lockheed Martin, PG&E, Salesforce and Wells Fargo formed EMBERPOINT LLC, a new venture focused on AI driven wildfire detection and response tools for utilities and first responders (Key Developments).

Valuation Changes

The fair value estimate was raised from US$569.68 to US$652.53, reflecting higher modeled inputs across the framework.
The discount rate edged lower from 7.85% to 7.78%, which modestly lifts the present value of projected cash flows.
Revenue growth moved up from 3.94% to 4.89%, indicating slightly stronger modeled top line expansion over time.
The net profit margin nudged higher from 8.79% to 8.94%, pointing to a small improvement in expected profitability on each dollar of sales.
The future P/E increased from 21.62x to 22.59x, implying a somewhat richer multiple applied to the updated earnings outlook.

Robust demand for advanced defense platforms and technologies, driven by geopolitical tensions and operational success, is fueling sustained revenue and backlog growth.
Enhanced risk management, ongoing efficiency initiatives, and strong investment in next-generation technologies are expected to support margin recovery and long-term earnings stability.
Cost overruns, reliance on legacy programs, budget uncertainty, regulatory risks, and intensifying competition threaten margins, cash flow, revenue growth, and long-term competitiveness.

Catalysts

About Lockheed Martin

An aerospace and defense company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide.What are the underlying business or industry changes driving this perspective?

Demand for advanced platforms such as the F-35, PAC-3, THAAD, and hypersonic weapons is being reinforced by actual combat use and rising geopolitical tensions, with multiple U.S. and international customers increasing orders and strong backlog growth likely, positioning Lockheed Martin for robust top-line (revenue) growth going forward.
Lockheed Martin's technological leadership in areas like stealth, electronic warfare, hypersonics, and integrated air/missile defense systems is being validated by operational success and customer priorities, supporting future contract wins and an expanding addressable market, which should lift revenues and provide opportunities for higher-margin, next-generation products.
The growing focus on homeland defense initiatives such as "Golden Dome," missile warning networks, and increased munitions spending suggests future secular increases in U.S. defense budgets and multi-year, high-value contract awards that are likely to contribute meaningfully to backlog, revenue visibility, and cash flow stability.
Recent program charges and process improvements have led to enhanced risk management, contract discipline, and cost controls, which-combined with ongoing digital transformation and operational efficiency drives-are expected to support future margin recovery and improved earnings growth in the medium term.
Lockheed Martin continues to invest heavily in R&D and next-generation technologies, enabling it to maintain technological leadership and diversify future revenue streams, further supported by public-private partnerships (e.g., rare earth magnet supply chain), all of which should underpin sustainable earnings and cash flow growth over the long term.

Lockheed Martin Earnings and Revenue Growth

Lockheed Martin Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Lockheed Martin's revenue will grow by 4.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 5.9% today to 8.7% in 3 years time.
Analysts expect earnings to reach $7.1 billion (and earnings per share of $32.36) by about September 2028, up from $4.2 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.9x on those 2028 earnings, down from 25.4x today. This future PE is lower than the current PE for the US Aerospace & Defense industry at 34.4x.
Analysts expect the number of shares outstanding to decline by 1.51% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.06%, as per the Simply Wall St company report.

Lockheed Martin Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Significant financial charges ($1.8 billion in Q2 2025) across major legacy programs, especially on complex fixed-price contracts, reveal persistent cost overruns, design, integration, and test challenges-creating risk of further profit compression and potential future earnings downgrades.
Ongoing reliance on and challenges within large classified and legacy programs (e.g., Aeronautics Classified, Sikorsky's TUHP and CMHP) could constrain top-line growth if technical or contractual issues continue, while limited revenue diversification raises the risk of stagnating or contracting core revenues.
Exposure to changing U.S. and allied defense budgets-including recent signals of reduced F-35 procurement requests and increases in alternative priorities (e.g., B-21 program, nuclear modernization)-poses risk to future contract awards and may impact revenue growth if defense spending priorities shift.
Regulatory and legal headwinds, such as the $4.6 billion tax dispute with the IRS, introduce uncertainty and could result in significant cash outflows or increased tax liability, negatively impacting free cash flow and net income in the medium term.
Intensifying competition and shifting industry profit pools-toward commercial space, hypersonics, counter-UAS, and integrated platform-centric or software-based solutions-may erode Lockheed Martin's share of traditional military hardware contracts, threatening both margins and future earnings if innovation and adaptation lag competitors.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $476.667 for Lockheed Martin based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $544.0, and the most bearish reporting a price target of just $398.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $81.0 billion, earnings will come to $7.1 billion, and it would be trading on a PE ratio of 18.9x, assuming you use a discount rate of 8.1%.
Given the current share price of $457.06, the analyst price target of $476.67 is 4.1% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Raise Lockheed Martin Target Amid Strong Orders and Sector Challenges