Lockheed Martin Corp. (LMT) delivered a mixed bag of results in its third-quarter earnings report, surpassing analysts’ expectations on the bottom line but falling short on revenue. Despite this, RBC Capital Markets analyst Ken Herbert remains upbeat on the company’s prospects, particularly highlighting the strong performance of its Missiles and Fire Control (MFC) segment.
Herbert pointed out that the MFC segment experienced an impressive 8% year-over-year revenue growth, accompanied by a 15% increase in operating income. This segment’s performance drove both sales and operating profit growth for the quarter, leading Herbert to consider it a “highlight for the potential outlook into 2025.”
Another positive note was Lockheed Martin’s strong free cash flow, reaching $2.1 billion in the quarter, surpassing the consensus estimate of $1.3 billion. RBC Capital Markets anticipates mid-single-digit growth in free cash flow, attributing this to the company’s improvements in working capital. This optimistic outlook supports the firm’s belief in continued strength for the stock.
While acknowledging the mixed results, Herbert emphasized that Lockheed Martin has outlined a multi-year growth framework extending to 2027, which he considers conservative. He believes that the company’s “lackluster baseline assumptions” might have contributed to the stock’s dip on the day of the earnings release.
However, he acknowledged that given the uncertainties surrounding the upcoming election, the timing of potential contracts, and supply chain concerns, the company’s cautious approach is justified.
RBC Capital Markets maintained its “Outperform” rating on Lockheed Martin shares, albeit with a slight reduction in the price target from $675 to $665. Despite the mixed results, the analyst remains positive about Lockheed Martin’s future, suggesting that investors should remain confident in the company’s long-term growth potential.
Lockheed Martin shares closed Wednesday’s trading session 1% lower at $571.10, according to Benzinga Pro.
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