Morgan Stanley upgraded its rating on Lockheed Martin from Equal-weight to Overweight and raised its price target from $690 to $835 on May 26 (US local time). Analyst Kristine Liwag stated that Lockheed Martin's 10-year framework agreement with the US Department of Defense regarding the F-35 Lightning II stealth fighter represents a de-risking event that significantly removes major uncertainties affecting the stock price. Market concerns that the F-35 budget — which accounts for 20–30% of Lockheed Martin's total revenue — could be cut to increase funding for missile programs within the defense budget had weighed on the stock, but this 10-year contract alleviates those concerns.
Morgan Stanley Upgrades Lockheed Martin Rating and Raises Price Target
Morgan Stanley upgraded Lockheed Martin to Overweight from Equal-weight and increased the price target to $835 from $690. According to CNBC on May 26 (US local time), analyst Kristine Liwag described the F-35 Lightning II stealth fighter 10-year framework agreement with the US Department of Defense as a de-risking event that removes major stock price uncertainties.
F-35 Framework Agreement Reduces Budget Uncertainty
Liwag explained that market concerns about potential cuts to the F-35 budget — which represents 20–30% of Lockheed Martin's total revenue — to fund increased missile program spending within the defense budget had constrained the stock. The 10-year contract eliminates this concern.
Missiles and Fire Control Segment Shows Production Growth
Liwag added that smooth production increases in the Missiles and Fire Control segment are driving mid-teens percentage revenue growth, providing upward momentum for the stock price.
Collaboration with Next-Generation Defense Tech Firms Supports Production
Liwag assessed that collaboration with next-generation defense technology companies such as Hadrian will accelerate production speed and defend against market penetration risks from emerging defense contractors.
Lockheed Martin stocks closed up $31.02 (5.13%) at $635.20 in regular trading on the strength of Morgan Stanley's positive commentary.
FAQ
What rating did Morgan Stanley assign to Lockheed Martin stocks on May 26?
Morgan Stanley upgraded Lockheed Martin from Equal-weight to Overweight and raised the price target from $690 to $835 on May 26 (US local time).
Why did Morgan Stanley upgrade Lockheed Martin stocks?
Analyst Kristine Liwag cited Lockheed Martin's 10-year framework agreement with the US Department of Defense for the F-35 Lightning II stealth fighter as a de-risking event that removes major uncertainties, particularly concerns that the F-35 budget could be cut to fund missile programs.
How much did Lockheed Martin stocks rise after Morgan Stanley's upgrade?
Lockheed Martin stocks closed up $31.02 (5.13%) at $635.20 in regular trading following Morgan Stanley's upgrade announcement.
