The U.S. Air Force has expanded its contract with defense contractor Lockheed Martin (LMT) for the development, engineering, and delivery of the C-130J aircraft by $10 billion, the Pentagon announced. Recently, the company secured a $3.63 billion modification to a previously awarded Navy contract.
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LMT Secures Air Force Contract Expansion, But Pressures Remain
The $10 billion contract expansion brings the total value of the deal for the C-130J aircraft to $25 billion. The work under this contract is expected to be completed by July 16, 2035. The C-130J contract involves sales to Egypt, Australia, New Zealand, France, the Philippines, Norway , and Germany.
Despite encouraging military spending amid geopolitical pressures, Lockheed Martin has been under pressure due to margin woes and cost overruns. LMT stock is flat year-to-date. Following a disappointing second-quarter performance, the company announced better-than-anticipated Q3 earnings.
However, several analysts remain cautious on LMT stock. In fact, recently, analysts at JPMorgan and Morgan Stanley downgraded LMT stock to Hold from Buy and slashed their price targets. Notably, Morgan Stanley analyst Kristine Liwag moved to the sidelines on Lockheed stock and lowered the price target to $543 from $630. The analyst noted that LMT stock underperformed its prime peers and the S&P 500 (SPX) due to “emerging defense tech disruption risk,” significant program losses, and pension-related headwinds to cash. Liwag also noted F-35 risk, given the lower Fiscal 2026 unit request and worries over European customer demand amid shifting geopolitics.
Liwag added that LMT lags peers based on her revenue, EPS, and free cash flow per share growth estimates over the 2025-28 period. “Catalysts to watch in 2026 center around Golden Dome opportunities,” said Liwag.
Is LMT Stock a Buy, Sell, or Hold?
Overall, Wall Street has a Hold consensus rating on Lockheed Martin stock based on nine Holds, four Buys, and one Sell recommendation. The average LMT stock price target of $524.93 indicates 9% upside potential.
