Key Takeaways
- UBS moved LMT to Buy from Neutral, increasing the price target from $581 to $674
- The firm expects 9% compound annual revenue growth through 2028, powered by missile systems, F-35 support services, CH-53K helicopters, and Trident missiles
- Missile and fire control segment revenue projected to surge 150% between 2025 and 2030
- The defense contractor currently trades at a 15% discount to the S&P 500, which UBS considers unwarranted
- The bank’s 2028 earnings forecast of $39.34 per share exceeds consensus estimates by 12%
Investment bank UBS delivered positive news for Lockheed Martin (LMT) shareholders on Tuesday, upgrading the aerospace and defense giant to Buy from Neutral while simultaneously boosting its price objective to $674 from $581. Shares were changing hands near $525 when the upgrade was announced.
Lockheed Martin Corporation, LMT
UBS equity analyst Gavin Parsons constructed a bullish investment thesis centered on ramping missile production capacity, expanding global defense expenditures, and diversified revenue channels extending well beyond the F-35 fighter jet program. The firm anticipates the company will achieve approximately 9% compound annual revenue expansion through 2028.
The missiles and fire control segment represents the cornerstone of UBS’s optimistic outlook. Analysts expect this business unit to generate 150% revenue growth spanning 2025 to 2030, with manufacturing volumes across four primary missile platforms climbing above 30% annually before moderating to sustainable growth rates.
Critical programs underpinning this expansion include the PAC-3 missile interceptor, Terminal High Altitude Area Defense system (THAAD), Precision Strike Missile, and the JASSM/LRASM cruise missile families. The defense contractor recently secured framework contracts valued at approximately $35 billion for THAAD and $59 billion for PAC-3 systems.
Rising demand stems from depleted Western munitions inventories, elevated stockpile targets, and amplified international defense spending. UBS characterizes this expansion as a fundamental industry realignment rather than a cyclical uptick.
Growth Drivers Extend Past Missile Systems
The optimistic investment case encompasses more than just missile production. UBS highlighted F-35 lifecycle support, the CH-53K heavy-lift helicopter platform, and the Trident submarine-launched ballistic missile program as overlooked contributors to future growth.
The F-35 program represented approximately 27% of Lockheed’s 2025 total revenue. While fighter jet production increases are anticipated to remain measured, UBS projects accelerated growth in maintenance, repair, and overhaul activities as the worldwide fleet expands and aging aircraft demand increased servicing.
Financial Projections Through 2028
UBS anticipates Lockheed will generate revenue of $81.05 billion in 2026, $88.48 billion in 2027, and $96.13 billion in 2028. The firm’s 2028 projection stands approximately 6% higher than current Wall Street consensus.
For profitability, UBS models adjusted earnings per share of $30.69 in 2026, $34.50 in 2027, and $39.34 in 2028. That final figure exceeds consensus expectations by 12%.
Free cash flow generation may experience temporary pressure in 2027 driven by pension funding obligations, but UBS anticipates a strong rebound, with cash flow climbing from $6.9 billion in 2025 to approximately $9.6 billion by 2030.
The investment bank calculates LMT currently trades at approximately 11.8 times forward EV/EBITDA, representing a 15% valuation discount relative to the broader S&P 500 index. UBS believes this gap is unjustified given the company’s promising growth trajectory and has adjusted its valuation multiple upward accordingly.
Under an optimistic scenario, UBS projects the shares could reach $870. The firm’s bearish case establishes downside potential at $452.
Recent contract awards validate the growth narrative. The Pentagon granted Lockheed a $90.2 million modification for the Trident II Life Extension initiative, three separate Navy contracts aggregating $41.8 million, and a $49 million arrangement for Target Sight System support services.
A seven-year framework partnership with the U.S. Department of War focuses on scaling production of THAAD and PAC-3 Missile Segment Enhancement interceptors.
Lockheed Martin shares settled at $524.48 on September 4.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
