Key Takeaways
- UBS elevated LMT to Buy from Neutral, increasing the price objective to $674 from $581
- Firm anticipates 9% compound annual revenue expansion through 2028, powered by missile systems, F-35 support services, CH-53K helicopter, and Trident initiatives
- Missile and fire control division expected to deliver 150% revenue expansion between 2025 and 2030
- Current valuation shows 15% discount versus S&P 500, which UBS considers unwarranted based on growth trajectory
- UBS earnings forecast for 2028 of $39.34 per share exceeds Street consensus by 12%
Shares of Lockheed Martin (LMT) received a positive catalyst Tuesday following UBS upgraded the defense contractor to Buy from Neutral while boosting its price objective to $674 from $581. Shares were changing hands near $525 when the upgrade was issued.
Lockheed Martin Corporation, LMT
UBS analyst Gavin Parsons presented a bullish investment thesis centered on ramping missile manufacturing, expanding defense expenditures, and diversified revenue sources extending beyond the F-35 fighter jet. The investment bank anticipates approximately 9% compound annual revenue growth extending to 2028.
The missile and fire control segment forms the backbone of this optimistic outlook. UBS anticipates this business unit generating 150% revenue growth spanning 2025 through 2030, with manufacturing volumes across four principal missile platforms expanding over 30% annually before moderating to a sustained, slower pace.
Critical programs propelling this expansion include the PAC-3 interceptor system, Terminal High Altitude Area Defense (THAAD), Precision Strike Missile, and JASSM/LRASM weaponry. Lockheed has secured framework contracts valued at approximately $35 billion for THAAD systems and $59 billion for PAC-3 production.
This demand surge stems from diminished Western munitions inventories, elevated stockpile requirements, and growing international defense investments. UBS characterizes this expansion as a fundamental market transformation rather than a temporary spike.
Additional Growth Drivers
The investment case extends well beyond missile systems. UBS highlighted F-35 support services, the CH-53K heavy transport helicopter, and the Trident submarine-launched ballistic missile program as underestimated growth engines.
The F-35 program represented approximately 27% of Lockheed’s 2025 total revenue. While aircraft manufacturing growth is anticipated to advance gradually, UBS projects accelerated expansion in maintenance operations and technical support as the worldwide fleet expands and demands increased servicing.
Financial Projections
UBS anticipates Lockheed generating revenue of $81.05 billion in 2026, $88.48 billion in 2027, and $96.13 billion in 2028. The 2028 projection exceeds Wall Street consensus estimates by approximately 6%.
Regarding profitability, UBS projects adjusted earnings per share of $30.69 in 2026, $34.50 in 2027, and $39.34 in 2028. That final figure stands 12% above consensus analyst expectations.
Free cash generation may experience temporary compression in 2027 attributed to pension funding obligations, but UBS anticipates robust recovery, climbing from $6.9 billion in 2025 to approximately $9.6 billion by 2030.
The investment bank values LMT at approximately 11.8 times forward-12-month EV/EBITDA, representing a 15% discount compared to the S&P 500. UBS considers this discount unjustified and increased its valuation multiple to reflect enhanced confidence in the company’s expansion potential.
Under an optimistic scenario, UBS projects the stock could reach $870. The bearish case establishes a floor value of $452.
Recent contract awards reinforce the growth narrative. The Pentagon issued Lockheed a $90.2 million modification for the Trident II Life Extension initiative, three Naval contracts totaling $41.8 million, and a $49 million agreement for Target Sight System maintenance services.
A seven-year framework deal with the U.S. Department of War focuses on increased production of THAAD and PAC-3 Missile Segment Enhancement interceptors.
Lockheed concluded trading at $524.48 on September 4.
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