Key Takeaways
- UBS shifted its stance on LMT to Buy from Neutral, increasing the price target from $581 to $674
- The firm anticipates 9% compound annual revenue growth extending through 2028, powered by missiles, F-35 support, CH-53K, and Trident contracts
- Missile and fire control segment revenue projected to surge 150% between 2025 and 2030
- Current valuation shows LMT trading at a 15% discount versus the S&P 500, which UBS considers unwarranted
- The bank’s 2028 earnings per share forecast of $39.34 exceeds consensus estimates by 12%
Shares of Lockheed Martin (LMT) received a significant vote of confidence Tuesday following UBS’s upgraded rating to Buy from Neutral, accompanied by a price target increase to $674 from the previous $581. At the moment of the upgrade, shares were changing hands near $525.
Lockheed Martin Corporation, LMT
UBS analyst Gavin Parsons constructed a bullish investment thesis centered on ramping missile output, expanding defense spending globally, and diversified income beyond the flagship F-35 program. The financial institution anticipates revenue expanding at approximately 9% annually through 2028.
The missiles and fire control segment forms the foundation of this optimistic outlook. UBS projects this division’s revenue will climb 150% from 2025 through 2030, with manufacturing volumes across four primary missile platforms increasing over 30% annually before transitioning to steady, sustained expansion.
Critical programs underpinning this trajectory include the PAC-3 interceptor system, Terminal High Altitude Area Defense (THAAD), Precision Strike Missile, and the JASSM/LRASM family. The defense contractor recently secured framework contracts valued at approximately $35 billion for THAAD and $59 billion for PAC-3 systems.
This demand surge stems from depleted Western arsenals, elevated inventory requirements, and growing international defense expenditures. UBS characterizes this expansion as a fundamental market shift rather than a temporary cyclical upturn.
Additional Growth Drivers
The investment case extends well beyond missile systems. UBS highlighted F-35 sustainment operations, the CH-53K heavy-lift helicopter platform, and the Trident fleet ballistic missile program as overlooked revenue accelerators.
The F-35 program represented approximately 27% of Lockheed’s 2025 top line. While aircraft production increases are expected to advance moderately, UBS anticipates stronger growth in maintenance and support services as the worldwide fleet expands and aging aircraft demand increased servicing.
Financial Projections
UBS anticipates Lockheed will generate revenue of $81.05 billion in 2026, $88.48 billion in 2027, and $96.13 billion in 2028. The firm’s 2028 revenue projection exceeds Wall Street’s consensus by roughly 6%.
For profitability, UBS estimates adjusted earnings per share of $30.69 in 2026, $34.50 in 2027, and $39.34 in 2028. That final figure stands 12% above the Street’s current expectations.
Free cash flow generation may experience temporary pressure in 2027 due to pension funding obligations, but UBS anticipates a rebound, climbing from $6.9 billion in 2025 to approximately $9.6 billion by 2030.
The investment bank calculates LMT currently trades at approximately 11.8 times forward EV/EBITDA, representing a 15% valuation discount compared to the S&P 500. UBS believes this discount is unjustified and adjusted its valuation multiple upward to reflect strengthened conviction in the company’s expansion trajectory.
Under an optimistic scenario, UBS envisions shares reaching $870. The firm’s bear case scenario values the stock at $452.
Recent contract awards support the growth narrative. The Pentagon granted Lockheed a $90.2 million modification for the Trident II Life Extension initiative, three separate Navy contracts totaling $41.8 million, and a $49 million agreement for Target Sight System support operations.
A seven-year framework arrangement with the U.S. Department of War focuses on scaling production of THAAD and PAC-3 Missile Segment Enhancement interceptors.
Lockheed Martin shares settled at $524.48 on September 4.
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