Morgan Stanley Upgrade Lifts Lockheed Martin to a Three-Month High

Lockheed Martin rose 5.1% on Monday to close at $635.20, its highest level in three months. The push came from Wall Street. Morgan Stanley upgraded the defense contractor and set one of the Street’s richest price targets on the stock, four sessions after a third-quarter report that beat estimates and sent management’s full-year forecast higher.

An $835 target leads a bullish turn

Morgan Stanley analyst Kristine Liwag raised her rating to overweight from equal-weight and lifted her price target to $835 from $690. She tied the call to the F-35 fighter program, describing a long-term production schedule as a source of visibility for Lockheed’s supply chain that reduces the downside risk long attached to the jet, and flagged missile output as a revenue driver she expects to grow in the mid-teens percent annually over the next five years. JPMorgan held a neutral rating but raised its own target to $665 from $620 the same day. The combination pushed the stock through a level it had not touched since July.

Not every desk moved with Morgan Stanley. JPMorgan kept its neutral stance even while lifting the target, a reminder that part of Wall Street wants to watch the production ramps deliver before paying up for the shares.

A quarter that raised the bar

The upgrades followed results Lockheed released on October 22. Sales climbed 11% to $20.7 billion from $18.6 billion a year earlier. Diluted earnings came to $7.97 a share, up from $6.95 and ahead of the $7.52 that analysts had modeled. Sales rose across all four of Lockheed’s business segments, and the standout was Missiles and Fire Control, where revenue climbed 24% as production accelerated on interceptor and rocket programs. Backlog, the work a company has booked but not yet delivered, reached a record $291.98 billion as of September 27, lifted by a multiyear award for PAC-3 interceptors.

Management raised full-year guidance across the board. It now sees diluted EPS of $30.35 to $30.75, sales of $80 to $82 billion, and free cash flow of $7.8 to $8.0 billion, up from a prior cash-flow range of $7.0 to $7.2 billion.

The climb behind Monday’s pop

Monday capped a steep autumn run. The shares have gained about 22% over the past 30 days and now sit far above their low of the past three months, near $492. The close cleared the highest point of the prior three months, around $609. Volume was heavy. It ran near 2.1 times the 20-day average, the kind of turnout that usually marks institutional repositioning rather than casual buying.

What the next report has to clear

Lockheed’s raised targets now set the measure for the quarters ahead. The bar is its own. Reaching the upper end of the new EPS range would take a strong finish to the year, and the lifted cash-flow guidance asks the same. The company has reported fourth-quarter and full-year results in late January in recent years, and that filing will show whether the interceptor and rocket ramps behind the record backlog are converting into delivered revenue. The market, for its part, has already paid up for the guidance and the upgrade.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.