Lockheed Martin reported earnings a couple weeks ago and the stock dropped almost 5% in one day. Revenue was flat, earnings missed expectations, and there were cost overruns on programs like the F-16 and C-130. The company kept their full-year outlook, but that wasn't enough to calm anyone down.
The weird part is that this is happening during what the CEO calls a "golden opportunity" for defense spending, with a record $1.5 trillion Pentagon budget request. Missile demand is through the roof, they just landed a big Space Force contract for a space-based interceptor program, and they're signing these long-term missile deals with the Pentagon that look more like commercial contracts. So why is the stock down 19% over the past month?
Bank of America kept a Neutral rating on it and cut their price target, basically saying the upside from all this missile demand is already priced in, and there's not enough visibility on classified programs to get more excited right now. Meanwhile free cash flow came in negative for the quarter, partly because they're spending big on classified work that we can't even see.
Great long-term story on paper. But the stock keeps drifting lower and I'm wondering when the actual numbers are going to match the headlines.