Wells Fargo analyst Matthew Akers downgraded Lockheed Martin to Underweight from Equal Weight with a price target of $415, up from $406. While the bull case for defense “seems clear” with geopolitical tensions high and politicians discussing higher defense spending, 2023 sets up as a “difficult U.S. budget environment, with significant downside potential if tensions ease,” Akers tells investors in a research note. The analyst thinks that for defense stocks to move much higher than current levels, a significant escalation in U.S. military involvement would be necessary, which he views as a low likelihood in the near term. For Lockheed, Akers sees a portfolio “likely to under-grow peers,” particularly if the company doesn’t win the Future Vertical Lift FLRAA contract where it is incumbent on Black Hawk.
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