Lockheed Martin Downgraded at Goldman Sachs Due to Several Headwinds

Lockheed Martin (NYSE: LMT) has had a solid last 12 months, rising 27%, but Goldman Sachs downgraded the stock on Thursday.

Analyst Noah Poponak downgraded shares of Lockheed to Sell from Neutral, cutting the price target to $332 from $388.

He told investors in a note that the US defense budget has grown significantly to an all-time high level, and with a significant amount of cumulative government debt, the focus on slowing spending growth or reducing it could return in 2023.

The analyst noted that Lockheed often grows at similar rates as the budget while it also has several program-specific headwinds in the near-to-medium term, such as Blackhawk, F-35, OPIR, and tough compares in missile and missile defense.

Poponak stated that this creates an “idiosyncratic growth headwind” on top of the overall budget pressures that could occur.

Lockheed Martin shares are down more than 3% premarket Friday.

Overall, out of 15 analysts, four have a Buy rating on the stock, nine have a Hold rating, and two have a Sell rating on the stock, according to TipRanks. The average price target is $490.53.

On Monday, TheFly reported that Lockheed Martin was awarded a $260.8 million US Navy contract to provide program management, engineering development, systems integration, special tooling and equipment, and long lead material in support of missile production.