Lockheed Martin (LMT +0.56%) stock gained for a second straight day Friday, rising 4.2% through 11:50 a.m. ET after Truist Securities analyst Michael Ciarmoli upgraded the defense giant to buy with a $605 price target, as StreetInsider.com reports.
If Lockheed stock hits that price target, it will mean a 12% profit over the next 12 months -- plus a dividend yield of nearly 2.7%.
Image source: Getty Images.
Why Truist loves Lockheed stock
Lockheed Martin stock got a huge lift yesterday after President Trump called for expanding the U.S. defense budget to $1.5 trillion in fiscal 2027. That's not the only reason why Ciarmoli upgraded Lockheed stock, however.
"We are upgrading LMT to BUY," says the analyst, because "LMT's 2025 underperformance coupled with attractive valuation creates a compelling risk/reward profile in 2026."
"DOGE fears have largely subsided," and the recent securing of a huge contract to supply the U.S. military with Patriot air defense missiles should boost performance at Lockheed's most profitable missiles and fire control business. Longer term, "ongoing geopolitical tensions should continue to drive demand supporting program production ramp ups."
NYSE: LMT
Key Data Points
Is Lockheed Martin stock a buy?
There are numerous reasons to buy Lockheed Martin stock. But are there any reasons not to buy Lockheed stock?
There are. And the main reason I'd cite is the same one that has Truist interested in Lockheed stock: Valuation.
Priced at 1.6 times trailing sales, Lockheed Martin stock costs a bit more than the 1x sales valuation I usually want to pay for a defense stock. Lockheed also costs 28.5 times earnings, giving it a pricey 2.4x PEG ratio at forecast growth rates of less than 12%.
Lockheed has a lot of things going for it right now. But at this price, an investment in Lockheed could still go badly wrong.
