Citi has moved to a more bullish posture on parts of the aerospace and defense complex, upgrading Lockheed Martin to Buy and initiating a positive 90-day catalyst watch on Karman Holdings, according to analyst John Godyn.
Godyn said his tactical investment stance has shifted - from the prior framework he described as "Aerospace First, Defense Next" to what he now calls "Defense Now." The change underpins Citi's renewed interest across defense-oriented names.
On Lockheed Martin, Godyn assigned a $582 price target, which the analyst says implies roughly a 17% expected total return from current levels. He supported the upgrade by pointing to a cheap valuation, improving company fundamentals and Lockheed's exposure to fast-growing themes through its MFC segment.
Godyn further observed that Lockheed has a pattern of strong recoveries following declines of the magnitude recently recorded. He characterized the company's recent drop from its February peak as "one of its worst quarterly declines in modern history," and highlighted historical rebounds after similar sell-offs.
For Karman Holdings, Citi kept a Buy rating and left a $76 price objective in place, representing about 52% upside from prevailing prices at the time of the note. The firm also placed the stock on a positive 90-day catalyst watch, with Godyn identifying three specific reasons for that designation:
- Valuation compression at Karman is substantially greater than that seen across aerospace and defense peers.
- There is a high probability of a second-quarter beat-and-raise, according to Citi's view.
- Karman has distinct exposure to what Godyn called "key megatrends" expected to accelerate through the remainder of 2026 and into 2027.
More broadly, Citi's note contrasted aerospace and defense dynamics. The firm indicated there is "less of a case for big beats in defense than aerospace but much more opportunity for multiples to drive outsized reactions" if investors come to recognize that growth trends are likely to pick up into late 2026 and beyond.
The research also reiterated bullish views on commercial aftermarket names and maintained positive catalyst watches on peers such as RTX and LOAR, with intra-quarter performance metrics described as "unusually strong."
Collectively, the actions reflect a tactical tilt toward defense equities, anchored by valuation, near-term earnings prospects and anticipated acceleration in longer-term thematic growth drivers.