Lockheed Martin Corporation (NYSE: LMT) is a “buy” even though its sales came in shy of Street estimates in the fiscal third quarter, says Peter Arment. He’s a Senior Analyst at Baird & Co.
Lockheed Martin stock has upside to $513
On Wednesday, Arment upgraded the defense technology company to “outperform”. His price objective of $513 represents close to a 20% upside from here.
Lockheed had better-than-expected profit in its recent quarter. What the Baird analyst is most bullish about, though, is its share repurchase programme. A day earlier, the Texas-based company doubled its planned buyback for 2022 to $8.0 billion.
With robust cash generation still intact, coupled with buyback momentum in a highly volatile equity market, the downside in the Lockheed Martin stock from current levels is likely limited.
LMT also said that it will repurchase $4.0 billion worth of its stock in each of the next two years.
Lockheed Martin reiterated its full-year guidance
Other reasons cited for the constructive view include reiterated guidance. Lockheed Martin forecasts $21.55 in per-share earnings this year on about $65.3 billion in sales – both roughly in line with expectations.
Headline risks have been reduced, tied to the multi-year FCF outlook and 2023 guidance, leaving little for bears. Management reiterated its focus on driving FCF per share materially higher over the next few years.
The defense stock is also a good pick because of the geopolitical tensions, both Ukraine and China related.
Versus its year-to-date high, the Lockheed Martin stock that pays a dividend yield of 2.74% is currently down about 7.0%.
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