Key Highlights
- Shares of Lockheed Martin declined 11.67% during the past week following a disappointing first-quarter earnings report
- First-quarter earnings per share of $6.44 fell short of analyst expectations of $6.74; revenue totaled $18.02B against $18.38B forecasts
- The company recorded negative free cash flow of -$291 million during the period
- Several Wall Street firms reduced their price targets; analyst consensus stands at Hold with average targets near $635
- Company executives maintained full-year 2026 guidance projecting $29.35–$30.25 EPS despite quarterly shortfall
The aerospace and defense contractor experienced significant selling pressure this week following its first-quarter 2026 results, which left investors disappointed across multiple metrics.
Lockheed Martin Corporation, LMT
The firm reported earnings of $6.44 per share, falling considerably short of Wall Street’s $6.74 projection and representing a decline from the $7.28 delivered during the same quarter of 2025. Top-line performance also underwhelmed, with revenues of $18.02 billion essentially flat compared to the prior year and missing analyst forecasts of $18.38 billion.
Part of the revenue headwind stemmed from calendar differences: the first quarter of 2026 contained one fewer working week compared to the year-ago period, shaving hundreds of millions from reported sales.
Cash generation proved particularly concerning, with free cash flow swinging into negative territory at -$291 million. Company management attributed this weakness to compressed margins, unfavorable working capital movements, and ongoing challenges with fixed-price contracts.
New order activity also disappointed, with the book-to-bill ratio registering just 0.6x for the quarter. While timing factors were cited as contributing to the weak bookings, the metric added to investor concerns about near-term momentum.
Wall Street Responds with Downgrades
The underwhelming results prompted multiple research firms to lower their price objectives. RBC Capital reduced its target from $650 down to $575 while maintaining its Sector Perform rating, highlighting “incremental negative estimated costs at completion” and uncertain growth visibility in the near term.
Additional firms including BNP Paribas Exane, Morgan Stanley, Deutsche Bank, and Susquehanna followed suit with their own reductions. The current analyst consensus reflects a Hold rating, with average price targets clustering around $635 — suggesting potential upside exceeding 25% from the current trading level near $510.
TD Cowen and TipRanks–xAI both reiterated Hold positions with targets ranging between $575 and $600. Although these figures imply meaningful appreciation potential, the predominance of neutral ratings continued to weigh on investor sentiment.
LMT began Friday’s session at $513.21. The shares now trade substantially below their 50-day moving average of $628, though they remain above the 200-day moving average of $553.
Strategic Outlook Remains Positive
Beyond the quarterly turbulence, Lockheed’s backlog and program pipeline continue to show strength. The Department of Defense has outlined plans to expand F-35 acquisitions extending through 2030–31, providing a foundation for sustained production activity.
The company secured an agreement with Peru for the sale of 12 F-16 Block 70 aircraft through a direct commercial transaction. Additionally, Lockheed won positions on several U.S. missile defense initiatives, including awards under the “Golden Dome” program, and received Pentagon contracts to rebuild Patriot missile stockpiles.
Executives stood by their full-year 2026 earnings guidance, maintaining projections of $29.35–$30.25 per share. Analyst consensus for fiscal 2026 currently estimates approximately $29.97 in earnings.
The firm maintains its quarterly dividend payment of $3.45 per share, translating to an annual yield of 2.7%. The current payout ratio stands at roughly 66.8%.
Vanguard Group reduced its stake by 17,369 shares during the fourth quarter but remains a major holder with 21.27 million shares, accounting for approximately 9.19% of outstanding stock with a market value near $10.29 billion.
Institutional ownership represents 74.19% of total shares outstanding. The stock’s 52-week trading range extends from $410.11 to $692.00, with current prices positioned in the lower portion of that band.
RBC Capital’s updated $575 price target paired with a Sector Perform rating represents the most recent analyst commentary on the stock.
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