Recent Weakness In Lockheed Shares Offers Buying Opportunity

Lockheed Martin Corporation LMT shares have underperformed the market over the past quarter, appreciating 1 percent as compared to the 8 percent rise in the S&P 500.

Argus’ John Eade maintains a Buy rating on the company, with a price target of $290.

Favorable View

The analyst believes that the stock faces ongoing headline risk, given that Lockheed Martin’s F-35 fighter jet program has been targeted by President Donald Trump.

“But management has a history of managing through challenges, and a GOP controlled House, Senate and White House should bode well for Defense spending,” Eade pointed out.

The analyst stated that Lockheed Martin has “consistently surprised” the market in recent years, even during periods when defense spending was declining.

However, government spending has started to accelerate once more, which is likely to provide a boost to the company’s earnings.

Focus On Returns

“We have a favorable view of the company’s focus on international revenue diversification, and expect increased geopolitical tension to benefit sales and earnings going forward,” Eade went on to say.

The analyst also noted that Lockheed Market has always been mindful of shareholder returns, with the company raising its dividend at a double digit rate over the past 14 years, while also buying back shares aggressively.

Eade believes the current yield of 2.9 percent is high for the industry, and views the stock favorably at the current levels.