Key Highlights
- Shares of Lockheed Martin declined 11.67% in the past week following disappointing first-quarter results
- The company reported Q1 earnings per share of $6.44, falling short of the $6.74 analyst consensus
- Revenue reached $18.02 billion, missing the expected $18.38 billion
- The quarter saw free cash flow sink to -$291 million
- Several Wall Street firms reduced their price targets, though the consensus implies significant upside from current levels
- Despite quarterly weakness, the company maintained its full-year 2026 EPS guidance of $29.35–$30.25
The aerospace and defense behemoth Lockheed Martin experienced a turbulent week in equity markets. Shares tumbled 11.67% following the release of its first-quarter 2026 financial results, which fell short of Wall Street expectations across multiple key metrics.
Lockheed Martin Corporation, LMT
The company delivered earnings of $6.44 per share for the quarter, missing analyst projections of $6.74 and representing a notable decline from the $7.28 reported during the same period in 2025. Top-line performance also disappointed, with quarterly revenue totaling $18.02 billion—essentially flat compared to the prior year and below the Street’s expectation of $18.38 billion.
Part of the revenue underperformance stemmed from a calendar quirk: the first quarter of 2026 contained one fewer working week versus the comparable 2025 period. This scheduling difference removed hundreds of millions in potential revenue.
The cash flow picture proved particularly concerning, with free cash flow sliding into negative territory at -$291 million. Company management attributed this deterioration to squeezed margins, fluctuations in working capital, and ongoing challenges with fixed-price contracts.
Order intake also disappointed, with the company posting a book-to-bill ratio of merely 0.6x during the quarter. While management characterized this as a timing matter, it contributed to investor unease surrounding the results.
Wall Street Responds with Target Reductions
The subpar quarterly performance prompted multiple investment firms to lower their price objectives. RBC Capital Markets reduced its target from $650 to $575 while maintaining a Sector Perform rating, citing additional negative cost-at-completion estimates and uncertain near-term growth visibility.
BNP Paribas Exane, Morgan Stanley, Deutsche Bank, and Susquehanna similarly reduced their forecasts. The average analyst price target now stands at approximately $635 with a consensus Hold recommendation—suggesting potential upside exceeding 25% from the current price near $510.
TD Cowen and TipRanks–xAI also kept Hold ratings intact, establishing targets between $575 and $600. While these figures indicate substantial appreciation potential, the preponderance of neutral recommendations continued weighing on sentiment.
LMT began trading Friday at $513.21. Shares currently trade significantly beneath the 50-day moving average of $628, though remain above the 200-day moving average of $553.
Strategic Outlook Remains Constructive
Looking beyond the quarterly turbulence, Lockheed’s backlog and program pipeline appear solid. The Department of Defense has outlined plans to expand F-35 acquisitions through the 2030–31 timeframe, which should bolster production schedules.
Internationally, Peru committed to purchasing 12 F-16 Block 70 aircraft through a direct commercial arrangement. The company also secured positions on various U.S. missile defense initiatives, including contracts under the “Golden Dome” designation, and won Department of Defense awards to replenish Patriot missile systems.
Company leadership stood by its full-year 2026 outlook, maintaining projected earnings per share between $29.35 and $30.25. Wall Street’s consensus forecast for fiscal 2026 currently centers around $29.97.
The quarterly dividend remains unchanged at $3.45 per share, translating to an annual yield of approximately 2.7%. The current payout ratio stands at roughly 66.8%.
Vanguard Group decreased its stake by 17,369 shares during the fourth quarter but continues to hold 21.27 million shares, accounting for about 9.19% of outstanding stock with an approximate value of $10.29 billion.
Institutional ownership represents 74.19% of all shares. The stock’s 52-week trading range spans from $410.11 to $692.00, with current prices situated near the lower portion of that band.
RBC Capital’s updated $575 price target alongside its Sector Perform rating represents the most recent analyst commentary on the shares.
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