Jefferies has reiterated a Hold rating on Lockheed Martin and kept its $540.00 price target following a fresh Department of War contract that substantially enlarges the companys interceptor production. The target remains well below Lockheed Martins current trading level of $597.27; the stock is trading close to its 52-week high of $599.32 and carries a P/E ratio of 33.4, according to InvestingPro data cited by the analyst note.
The newly announced agreement will lift Terminal High Altitude Area Defense - THAAD - interceptor production from 96 units per year to 400 units per year, Jefferies analyst Sheila Kahyaoglu said. This expansion comes on the heels of an earlier arrangement that raised production of Patriot Advanced Capability-3 - PAC-3 - missiles from roughly 600 per year to about 2,000 per year, both actions taking place within Lockheeds Missiles and Fire Control (MFC) division.
Jefferies highlights the potential revenue uplift from the THAAD increase alone at about $4.5 billion annually. Taken together, the two recent production expansions are estimated to represent roughly $8 billion in incremental sales for Lockheed Martin, based on the analysts calculations.
Within the company structure, the THAAD system is part of Lockheeds Air & Missile Defense business. That business currently produces approximately $1.1 billion in revenue, which Jefferies notes represents about 8% of the segments total.
Beyond the missile production announcements, Lockheed Martin has secured several other contracts and contract modifications. Its Rotary and Mission Systems division received a $129,986,060 award to support the Royal Australian Air Forces C-130J Maintenance and Aircrew Training Systems program. The U.S. Department of War also issued a $9.58 million contract modification for combat system integration and testing work on littoral combat ships and unmanned surface vessels.
Additional defense work includes two contracts totaling about $225 million tied to missile systems and naval weapons support. Among these is a $202.8 million modification for PAC-3 missile work to be performed at Lockheed Martins Grand Prairie, Texas facility. In a separate development, Mexico has become the first Latin American country to operate Lockheed Martins C-130J Super Hercules, joining 24 other nations that use the tactical airlifter.
Collectively, these awards and modifications underscore continued production scaling and international adoption across multiple Lockheed Martin platforms. Jefferies Hold rating and price target suggest the analyst is weighing the sizable contract wins and production ramps against the companys current premium valuation.
Summary of developments
- Jefferies maintains Hold and $540 price target on Lockheed Martin while the stock trades near $597.27.
- THAAD interceptor production will increase from 96 to 400 units per year; PAC-3 production previously rose from ~600 to ~2,000 per year.
- Jefferies estimates incremental THAAD output could add $4.5 billion in annual sales and, together with PAC-3 expansion, roughly $8 billion in incremental sales.
Operational and market implications
- The production ramps sit within Lockheeds Missiles and Fire Control division and the Air & Missile Defense business, impacting defense manufacturing and aerospace supply chains.
- Several contract awards and modifications signal ongoing government procurement and international sales activity across missile systems, naval support, and airlift maintenance programs.