An analyst’s bullish new note on Lockheed Martin (LMT 1.68%) and the wider U.S. defense sector provided lift to the company’s stock on an otherwise bearish Wednesday trading session. Lockheed Martin’s shares closed the day almost 2% higher in price, providing quite the contrast to the tumbling S&P 500‘s (^GSPC -2.24%) 2.2% decline.
An industry maneuvering for growth
The analyst in question was Kristine Liwag of veteran white-shoe investment bank Morgan Stanley. Well before market open that day, Liwag changed her Lockheed Martin recommendation to overweight (i.e., buy) from equal weight (hold). In doing so, she added $50 per share to his price target on the storied defense stock, to $575 per share.
The pundit’s new take on the company was part of a broader Morgan Stanley update on defense industry stocks. According to reports, the investment bank rates the entire sector as “attractive,” as opposed to its formerly cautious view that it’ll be an in-line performer. The company sees the U.S. defense budget being set at $1 trillion this year, amid growing international exports of combat goods, as a positive for these stocks.
While Morgan Stanley’s top pick in the sector wasn’t Lockheed Martin — that honor went to longtime rival Northrop Grumman, due to better alignment with current U.S. defense priorities — Liwag still felt Lockheed Martin was worthy of an upgrade. She particularly highlighted its robust and active foreign sales activities as potential motors of future growth.
Supplier to the world
This is indeed a fertile time for the global defense industry, with the grinding war in Ukraine, intense clashes in the Middle East, and rising geopolitical tensions elsewhere. Liwag is spot-on with her view that major defense exporters are in an excellent position just now, and Lockheed Martin is a primary example of such a company.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.
