Goldman Sachs Upgrades Lockheed Martin to "Conviction Buy" (LMT)

Goldman Sachs Upgrades Lockheed Martin to “Conviction Buy” (LMT)


Analysts at Goldman Sachs upgraded defense and security company Lockheed Martin Corporation (LMT) on Thursday, calling it the best business and dividend payer in the Defense sector

The analysts upgraded LMT from “Neutral” to “Conviction Buy” with a price target of $127. This price target suggests an 18% upside to Wednesday’s closing price of $107.31.

Goldman Sachs noted three key drivers for Lockheed Martin.

  1. Attractive free cash flow: “LMT has been consistently converting net income to free cash at a stronger pace than peers. It then consistently ranks in the top 3 of the primes on the total “social contract” paid to shareholders (dividend yield + share repurchase accretion) with the industry leading dividend yield.”
  2. Best positioned defense company: “Most Defense companies claim to be in the sweet spot of Pentagon priorities. But LMT has shown it in the numbers.”
  3. Improving production of the Joint Strike Fighter: “The F-35 program has had some challenges over time from a development timeline and cost perspective. But it is now largely through its most challenging phases of development, and the most recent datapoints have been an acceleration in IOC (which is rarely seen on new programs), a reduction in the cost profile, and an across-the-board reaffirmation of international customer support.”

Lockheed Martin shares were up 32 cents, or +0.30%, during pre-market trading on Thursday. The stock is up +16.27% year-to-date.

The Bottom Line
Shares of Lockheed Martin (LMT) have a dividend yield of 4.29% based on last night’s closing price of $107.31 and the company’s annualized dividend payout of $4.60 per share.

Lockheed Martin Corporation (LMT) is recommended at this time, holding a DARS™ Rating of 3.6 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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