Lockheed Martin Shares Gain on Defense Production Expansion and Analyst Upgrade

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A series of operational wins and new contract awards has refocused Wall Street's attention on U.S. defense contractor Lockheed Martin. Following the company's solid quarterly results, analysts at Swiss banking giant UBS have issued a significantly more bullish assessment. The core of this optimism lies not in its fighter jet business, but in the substantial planned scaling of its missile defense capabilities.

Lockheed Martin's recent fourth-quarter 2025 financial report provided a strong foundation for this positive sentiment. The company reported earnings per share (EPS) of $5.80, surpassing analyst consensus estimates. Revenue saw a 9.1% year-over-year increase, reaching $20.32 billion.

For the ongoing 2026 fiscal year, management has provided guidance projecting revenue in the range of $77.5 to $80.0 billion. They anticipate earnings per share to land between $29.35 and $30.25. This forecast is supported by a record-high backlog of orders, which has grown to $194 billion, offering the company considerable visibility and planning security. The stock, following recent gains, is trading near its 52-week high at $640.40.

UBS Raises Price Target on Missile Defense Growth Trajectory

On Monday, UBS analysts elevated their price target for the defense stock from $580 to $663 per share. This upward revision is primarily driven by the prospects of the "Missiles and Fire Control" (MFC) segment. The research team forecasts this division will achieve average annual growth of 16 percent through the end of the decade.

Central to this growth expectation is a framework agreement with the U.S. Department of Defense that outlines a major expansion of production capacity. Specifically, Lockheed Martin plans to quadruple the annual production of THAAD interceptor missiles over the next seven years, increasing output from 96 to 400 units. Concurrently, manufacturing of Patriot PAC-3 missiles is slated to ramp up to 2,000 units per year. UBS also views positively the company's better-than-expected cash flow projections for 2025 and 2026, which should help cushion the necessary investments for this expansion.

Operational Momentum with New Contracts and Strategic Partnerships

The positive analyst commentary coincides with concrete operational developments. At the start of the week, Lockheed Martin secured a $328.5 million contract for Legion-ES sensor systems under a Foreign Military Sales agreement. The corporation also announced the delivery of the first Sentinel A4 radar to the U.S. Army. This system is designed for detecting drones and cruise missiles; a decision on full-rate production is anticipated later this year.

From a strategic standpoint, a new memorandum of understanding with Japanese technology firm Fujitsu is noteworthy. The two companies intend to collaborate on dual-use technologies, with a planned focus on quantum computing and AI-enabled defense systems.