Lockheed Martin Shares Fall 12% After Earnings Miss and Several Price Target Cuts

TLDR

• Lockheed Martin’s stock experienced a 11.67% decline over the past week following its failure to meet Q1 EPS and revenue expectations.
• The company reported Q1 EPS of $6.44, falling short of the consensus estimate of $6.74. Revenue for the quarter was $18.02 billion, below the expected $18.38 billion.
• Free cash flow turned negative, registering at -$291 million for the quarter.
• Several analysts have reduced their price targets for the stock. The consensus rating remains “Hold” with an average target price of approximately $635.
• Despite the quarterly shortfall, management has reaffirmed its FY2026 EPS guidance, projecting a range of $29.35–$30.25.

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(SeaPRwire) –   Lockheed Martin faced a challenging week on Wall Street, with the defense contractor’s stock dropping 11.67% after its first-quarter 2026 earnings report disappointed investors across multiple metrics.

Lockheed Martin Corporation, LMT

The company’s reported EPS of $6.44 missed the Street’s consensus estimate of $6.74 and was a decrease from the $7.28 earned in Q1 2025. Revenue reached $18.02 billion, showing little year-over-year change and falling short of the $18.38 billion anticipated by analysts.

One contributing factor to the lower revenue was the fact that Q1 2026 had one fewer working week compared to the same period last year, which reduced the top line by several hundred million dollars.

Free cash flow turned negative, amounting to -$291 million. The company attributed this to factors such as margin compression, fluctuations in working capital, and pressure on fixed-price contracts.

Bookings were also weaker, resulting in a book-to-bill ratio of just 0.6x for the quarter. While timing issues were cited as a reason, this also contributed to a cautious sentiment surrounding the earnings release.

Analysts Cut Targets, Hold Ratings Stay

The earnings miss prompted a series of price target reductions from analysts. RBC Capital lowered its target from $650 to $575 while maintaining a Sector Perform rating, citing “incremental negative estimated costs at completion” and mixed near-term growth prospects.

Other firms, including BNP Paribas Exane, Morgan Stanley, Deutsche Bank, and Susquehanna, also adjusted their price targets downward. The current consensus rating is “Hold,” with an average price target of around $635, suggesting potential upside of over 25% from the current trading price of approximately $510.

TD Cowen and TipRanks–xAI maintained “Hold” ratings, setting price targets in the $575–$600 range. Despite the implied upside from these targets, the consistent stream of neutral ratings continued to put pressure on the stock.

LMT opened Friday at $513.21. The stock is now trading below its 50-day moving average of $628 but remains above its 200-day moving average of $553.

Long-Term Picture Holds Steady

Looking beyond the quarterly results, Lockheed Martin’s order backlog and program pipeline remain robust. The Pentagon plans to increase F-35 purchases through 2030–31, which is expected to support future production volumes.

Peru has agreed to acquire 12 F-16 Block 70 jets through a direct commercial sale. Lockheed has also secured roles in U.S. missile defense programs, including the “Golden Dome” awards, and received Department of Defense contracts for replenishing Patriot missile inventories.

Management has reiterated its FY2026 guidance, forecasting EPS between $29.35 and $30.25. The sell-side consensus for the full year is approximately $29.97.

The company continues to pay a quarterly dividend of $3.45, which translates to a 2.7% yield. The payout ratio is currently around 66.8%.

In the fourth quarter, Vanguard Group reduced its holdings by 17,369 shares but still owns 21.27 million shares, representing approximately 9.19% of the company and valued at about $10.29 billion.

Overall, institutional investors hold 74.19% of the stock. LMT’s 52-week trading range is from $410.11 to $692.00, with the stock currently trading in the lower half of this range.

RBC Capital’s revised $575 price target and Sector Perform rating represent the most recent analyst action concerning the stock.