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Argus Sees Lockheed Martin Raising Guidance Again This Year

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Argus Sees Lockheed Martin Raising Guidance Again This Year
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Lockheed Martin Corporation (NYSE: LMT) reported another quarterly earnings beat and raised its guidance; and could announce another upward revision to their forecasts as the year progresses, Argus’s John Eade said in a report. He maintained a Buy rating on the company, while raising the price target from $255 to $290.

Lockheed Martin’s shares have appreciated 13 percent in the past quarter, versus a 3 percent gain in the S&P 500. Analyst John Eade added, “Our target of $290 assumes continued strong earnings based on increased U.S. and international defense spending.”

Results And Guidance

Lockheed Martin reported its 2Q16 adjusted EPS at $3.32, up 13 percent y/y and significantly higher than the consensus forecast of $2.93. Revenue came in at $12.9 billion, representing 11 percent growth. Management raised guidance once again for 2016, projecting sales of $50.0-$51.5 billion, higher by $400 million at each end, and EPS of $12.15-$12.45, higher by $0.65 at both ends.

Related Link: Lockheed Martin Q2 Results, Outlook Satisfies Investors

“The adjusted EPS guidance reflects improvement in segment operating profit and an accounting change related to executive compensation,” Eade wrote.

Upside

Lockheed Martin has inked a definitive agreement to combine its government IT infrastructure services business with Leidos Holdings, Inc. (NYSE: LDOS). The analyst noted that the transaction would include a stock split-off and is expected to unlock about $5 billion in enterprise value for Lockheed Martin’s shareholders.

Almost 80 percent of the company’s revenues come from defense spending by the US government. “Recent budget trends have been generally supportive for the industry,” Eade stated.

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Latest Ratings for LMT

DateFirmActionFromTo
Jan 2017RBC CapitalInitiates Coverage OnSector Perform
Dec 2016Deutsche BankMaintainsBuy
Nov 2016Stifel NicolausUpgradesHoldBuy

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