Deutsche Bank analyst Scott Deuschle remains bullish on Lockheed Martin Corporation (LMT), reiterating his ‘Buy’ rating and increasing the price target from $600 to $620. The analyst believes Lockheed Martin is likely to prefund its pension in the fourth quarter, although a formal announcement might be delayed until completion. This move would necessitate a debt issuance, which Deuschle expects to occur sooner rather than later.
Deuschle forecasts strong third-quarter earnings, predicting earnings per share (EPS) of $6.70, slightly exceeding the Street’s estimate of $6.47. He also anticipates revenue of approximately $17.4 billion, which is $100 million below the consensus, due to the analyst’s incorporation of the $500 million F-35 contract delay impact at Aeronautics, a factor not fully reflected in market projections.
The analyst identifies the Space segment as a key area of potential upside, noting that underlying margins, excluding United Launch Alliance (ULA), are expected to decline significantly in the second half. Despite this, Deuschle believes this outlook is conservative, given that two significant contracts – Orion and OPIR – are entering a mature phase of their production lifecycle.
Deuschle projects a third-quarter revenue beat, potentially leading to an upward revision of the full-year revenue guidance, potentially reaching $72 billion. He also anticipates a 1%-2% increase to the midpoint of the full-year segment EBIT guidance, especially if EBIT upside is realized in the Space segment during the third quarter, mirroring the performance seen in the first half. Furthermore, the analyst expects Lockheed Martin to provide some indication of its financial trends for 2025. Based on the company’s conservative track record, Deuschle anticipates a projected revenue growth of approximately 3% and reiterates his target for 10-20 basis points of margin expansion.
Deuschle also forecasts an announcement of a dividend increase before the earnings release and a likely top-up of the buyback authorization.
LMT shares were trading down by 0.29% to $601.79 at the last check on Thursday.
