TLDR
- UBS upgraded LMT from Neutral to Buy, raising its price target to $674 from $581
- Analysts project 9% revenue CAGR through 2028, driven by missiles, F-35 sustainment, CH-53K, and Trident programs
- UBS forecasts 150% revenue growth in the missiles and fire control segment from 2025 to 2030
- LMT trades at a 15% discount to the S&P 500, which UBS sees as unjustified given the growth outlook
- UBS 2028 EPS estimate of $39.34 sits 12% above Wall Street consensus
Lockheed Martin (LMT) got a boost Tuesday after UBS upgraded the stock to Buy from Neutral and lifted its price target to $674 from $581. The stock was trading around $525 at the time of the upgrade.
Lockheed Martin Corporation, LMT
UBS analyst Gavin Parsons laid out a growth case built on accelerating missile production, rising defense budgets, and revenue streams beyond the F-35. The bank projects revenue growing at a compound annual rate of roughly 9% through 2028.
The missiles and fire control division is the core of that thesis. UBS sees revenue from that business rising 150% between 2025 and 2030, with production volumes across four major missile families growing at more than 30% per year before settling into a slower, sustained rate.
Key programs driving that growth include the PAC-3 interceptor, Terminal High Altitude Area Defense (THAAD), Precision Strike Missile, and JASSM/LRASM. Lockheed recently locked in framework agreements worth roughly $35 billion for THAAD and $59 billion for PAC-3.
Demand is being fueled by depleted Western stockpiles, higher inventory targets, and increased international military spending. UBS views the expansion as a structural shift, not a short-term reaction.
Beyond Missiles
The bull case doesn’t stop at missiles. UBS flagged F-35 sustainment, the CH-53K heavy-lift helicopter, and the Trident fleet ballistic missile program as underappreciated growth contributors.
The F-35 accounted for around 27% of Lockheed’s 2025 revenue. Aircraft production growth is expected to be gradual, but UBS sees faster expansion in maintenance and support as the global fleet grows and requires more upkeep.
Revenue and Earnings Outlook
UBS forecasts Lockheed revenue of $81.05 billion in 2026, $88.48 billion in 2027, and $96.13 billion in 2028. The 2028 estimate runs about 6% above Wall Street consensus.
On earnings, UBS projects adjusted EPS of $30.69 in 2026, $34.50 in 2027, and $39.34 in 2028. That 2028 number is 12% above consensus.
Free cash flow could flatten temporarily in 2027 due to pension contributions, but UBS expects it to recover, rising from $6.9 billion in 2025 to around $9.6 billion by 2030.
The bank values LMT at roughly 11.8 times next-12-month EV/EBITDA, a 15% discount to the S&P 500. UBS sees that discount as unwarranted and raised its multiple to reflect greater confidence in the company’s growth runway.
In a bull scenario, UBS sees the stock reaching $870. Its downside case puts the value at $452.
Recent contract wins back up the growth story. The Pentagon awarded Lockheed a $90.2 million modification for the Trident II Life Extension program, three Navy contracts totaling $41.8 million, and a $49 million deal for Target Sight System support services.
A seven-year framework agreement with the U.S. Department of War targets expanded production of THAAD and PAC-3 Missile Segment Enhancement interceptors.
Lockheed closed at $524.48 on September 4.
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