Lockheed Martin’s Q1 Earnings to Rise About 4%; Target Price $425

Bethesda, Maryland-based global security and aerospace company Lockheed Martin is expected to report its first-quarter earnings of $6.31 per share on Tuesday, which represents year-over-year growth of about 4% from $6.08 per share seen in the same quarter a year ago.

The world’s largest defense contractor would post revenue growth of over 5% to around $16.4 billion. It is worth noting that in the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 2%.

According to analysts at TREFIS, revenues and earnings to observe 4% and 6% growth in 2021, respectively.

Lockheed Martin shares, which fell about 9% last year, rebounded over 10% so far this year.

Analyst Comments

“We see roughly in line EPS of $6.33 (+4% y/y) on near consensus revenue of $16.45B (+5%). This is in line with weapons outlays (nearly +7% in Jan-Feb), which is typically correlated with sector sales growth, while our Q1 segment margin of 10.9% is slightly below Q1:20’s 11.0%,” noted Cai von Rumohr, equity analyst at Cowen.

“2021 revenue guide is unlikely to change after only 1Q, so the midpoint of $67.8B still may lag Street’s $68.06B. We est. the segment margin of 11.0% in line with the midpoint of guidance. Diluted EPS midpoint of $26.15 lags Street’s $26.34.”

Lockheed Martin Stock Price Forecast

Seven analysts who offered stock ratings for Lockheed Martin in the last three months forecast the average price in 12 months of $425.33 with a high forecast of $445.00 and a low forecast of $394.00.

The average price target represents an 8.56% increase from the last price of $391.81. Of those seven analysts, five rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $445 with a high of $633 under a bull scenario and $310 under the worst-case scenario. The firm gave an “Overweight” rating on the aerospace company’s stock.

“We view Lockheed as one of the most well-positioned companies with leadership positions in hypersonics, directed energy, autonomy, multi-domain operations, and space. Additionally, the company has one of the most well-insulated and visible earnings profiles in the group as a result of the F-35 program that makes up nearly 30% of total company revenues that is paired with multi-decade visibility,” said Kristine Liwag, equity analyst at Morgan Stanley.

“Our top Defense pick is Lockheed and we expect the stock to outperform defense peers due to its defensible portfolio, steady execution, strong free cash flow generation, and underlevered balance sheet.”

Several other analysts have also updated their stock outlook. UBS raised the stock price forecast to $425 from $400. In January, Berenberg lowered the target price to $400 from $425 and JP Morgan cut the price objective to $397 from $410.

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