Shares of Lockheed Martin(NYSE: LMT) climbed 2.5% through late morning trading on Tuesday after UBS upgraded the defense giant to Buy from Neutral, pointing to a multi-year expansion in missile production that the Swiss bank believes is being underestimated by the market.<\/p>\n
The upgrade comes with a significantly higher price target. UBS raised its 12-month target to $674 from $581, implying roughly 26% upside from the Sept. 4 closing price of $524.48. The bank’s thesis rests on what it describes as “stronger and more durable earnings growth than investors currently expect,” driven by the F-35 fighter jet franchise, missile sales, and a broader replenishment of depleted U.S. weapons stockpiles.<\/p>\n
At the center of the call is Lockheed’s Missiles and Fire Control (MFC) segment, which UBS expects to more than double in size over the next five years. The bank projects MFC revenue climbing from $14.5 billion in 2025 to $35.7 billion by 2030, a compound annual growth rate exceeding 20%. Production of PAC-3 interceptors, THAAD systems, PrSM precision strike missiles, and JASSM\/LRASM cruise missiles is expected to accelerate sharply as governments around the world reassess stockpile requirements following recent conflicts.<\/p>\n
UBS argues the buildup is structural rather than cyclical. Advanced interceptor inventories have been drawn down, and defense planners are now funding missile defense and precision strike systems at levels that suggest production of key platforms could be roughly four times higher in 2035 than it was in 2025. That horizon extends well beyond typical procurement cycles, supporting the bank’s view that Lockheed’s growth runway is unusually long.<\/p>\n
Multiyear contract awards are providing unusual visibility. UBS highlighted a $35 billion THAAD award and a nearly $60 billion PAC-3 framework agreement as evidence that customers are committing to sustained production. Lockheed’s book-to-bill ratio reached 3.2 times in the most recent quarter, a dramatic jump from 1.2 times in 2025 and a signal that order intake is far outpacing revenue recognition.<\/p>\n
The F-35 program contributes a second growth pillar, though not through aircraft deliveries. While production volumes are expected to remain broadly stable, sustainment revenue is forecast to rise from $5.1 billion in 2025 to $8.8 billion in 2030. A growing global fleet and increased spending on readiness are the key drivers, turning the aftermarket into a recurring revenue stream that complements new missile orders.<\/p>\n
Additional programs round out the growth picture. CH-53K heavy-lift helicopters and Trident fleet ballistic missiles are both seeing budget increases, with Trident funding proposed at $5.2 billion for fiscal 2027 and CH-53K funding potentially reaching $4.1 billion. UBS expects these programs to further diversify Lockheed’s revenue base beyond its two largest franchises.<\/p>\n
The bank’s financial projections paint a picture of accelerating top-line and bottom-line growth. Revenue is expected to climb from $75.0 billion in 2025 to $96.1 billion by 2028, while adjusted earnings per share are forecast to nearly double over the same period.<\/p>\n
Metric20252026E2027E2028ERevenue (USD billions)75.081.088.596.1Adjusted EPS (USD)21.4830.6934.5039.34<\/p>\n
Note: Figures are UBS forecasts. Revenue represents a 9% compound annual growth rate through 2028.<\/p>\n
Cash generation is another element of the bull case. Capital expenditure is expected to rise to 3.2% of revenue in 2027, the highest level in more than a decade, as Lockheed expands missile production capacity. Despite that investment and a pension-related drag in 2027, UBS expects free cash flow to accelerate alongside EBITDA growth, with free cash flow per share rising about 50% by 2030.<\/p>\n
Valuation also appears supportive. Lockheed trades at approximately 19.2 times earnings and less than 14 times free cash flow, with a dividend yield of about 2.6%. Against consensus expectations for earnings growth in the 19%-plus range over the next five years, according to data from S&P Global Market Intelligence, the stock’s current multiple leaves room for expansion if UBS’s forecasts prove accurate.<\/p>\n
Consensus estimates already reflect optimism about Lockheed’s near-term trajectory, but UBS’s projections go further. The bank sees double-digit earnings-per-share upside to consensus by 2028, suggesting that even bullish analysts may not fully appreciate the scale of the missile production ramp.<\/p>\n
The upgrade arrives ahead of Lockheed’s next earnings report, expected in late October. Investors will be watching for confirmation that the book-to-bill momentum and missile order flow described by UBS are translating into tangible revenue growth and margin expansion.<\/p>\n","protected":false},"excerpt":{"rendered":"Shares of Lockheed Martin(NYSE: LMT) climbed 2.5% through late morning trading on Tuesday after UBS upgraded the defense…\n","protected":false},"author":2,"featured_media":127836,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[129],"tags":[62346,16536,62344,16152,62345,62340,62341,62343,62342,62347,223],"class_list":["post-127835","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ubs","tag-ch-53k","tag-f-35","tag-jassm","tag-lockheed-martin","tag-lrasm","tag-missiles-and-fire-control","tag-pac-3","tag-prsm","tag-thaad","tag-trident","tag-ubs"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/117237307543339148","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/127835","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=127835"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/127835\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/127836"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=127835"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=127835"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=127835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}