Truist believes that Lockheed Martin’s valuation remains attractive as the new year kicks off. The bank upgraded the aerospace and defense stock to buy from hold. Analyst Michael Ciarmoli’s new price target of $605, up from $500, represents upside of 17% from Thursday’s close. Lockheed Martin rose less than 11% over the past 12 months, lagging the S & P 500’s 17% gain in the same period. Ciarmoli pointed to this underperformance, coupled with an attractive valuation, as factors that have created a compelling entry point and risk versus reward profile this year. LMT 1Y mountain LMT 1Y chart Lockheed shares trades at 17 times forward earnings, per FactSet. That’s well below the S & P 500’s multiple of 22. Lockheed’s valuation is also lower than that of Northrop Grumman and RTX — which have price-to-earnings ratios of 20 and 27, respectively. “With a goal to cut overall government waste, costly weapons systems that were behind schedule, failed to meet capability and readiness needs, and that incurred excessive sustainment costs were squarely in the cross hairs. We believe that risk and overhang has subsided considering DOGE has largely been disbanded,” he said. Ciarmoli’s comments come after President Donald Trump called for a $1.5 trillion military budget for 2027, signaling more contracts could come Lockheed’s way. While the risk from new entrants in the defense industry remains high, the analyst believes that Lockheed Martin’s strong portfolio will enable it to continue to win its fair market share. Ciarmoli added that the company has a strong and sustainable competitive moat. “We also believe LMT’s expertise and track record of success in exquisite systems provides a level of durability and a sustainable competitive advantage over new entrants,” he added. Continued geopolitical tensions, alongside the desire to replenish inventories and modernize capabilities, will continue to drive demand for Lockheed Martin products higher, with the company already have several contracts in the pipeline. Ciarmoli also believes that international opportunities could abound as allies seek aircraft sustainment, he wrote.
