Lockheed Martin Corp: Double digit growth headlines strong 2Q

研报英文原文证据摘录

Lockheed Martin Corp: Double digit growth headlines strong 2Q

Forecast returns

Forecast price appreciation 4.6%

Forecast dividend yield 2.8%

Forecast stock return 7.4%

Market return assumption 9.3%

Forecast excess return -1.9%

Company Description

Lockheed Martin is the world's largest prime defense contractor and generated 73% of its

revenue from the US government in 2022. The company operates in four segments:

Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. Lockheed's

largest program is the F-35 stealth fighter, representing 27% of its revenue, but it also

provides a wide range of other products and services.

UBS EPS and Consensus EPS

The UBS EPS is an adjusted diluted EPS metric. It is calculated using the UBS analyst's

interpretation of earnings suitable for valuation purposes divided by the diluted number of

shares. This may differ to the way the consensus EPS metric has been calculated.

Valuation Method and Risk Statement

Our 12-month price target is based on 12.6 our 5-8 month EV/EBITDAP.

Risks

Defense budget: Changes to the Defense budget trajectory, whether by Congressional action

or the Presidential request, could immediately impact valuation and medium-long term

consensus estimates. While EPS and cash flow per share were stable last downturn, cuts risk

declines in both. Higher budget growth, even just keeping pace with inflation, would likely be

upside to

consensus.

Politics: Worsening political gridlock in Washington could increase the risk of budget cuts and

disruption to Government funding. An increase in the prioritization of austerity could lead to

budget cuts. Inversely, an orderly funding of FY24 and an extension of the 2025 debt ceiling

would lift a near-term sentiment overhang.