Lockheed Martin Shares Fall 11.67% After Q1 Earnings Miss; Analysts Cut Price Targets

Lockheed Martin’s shares fell 11.67% over the past week after the defence contractor reported weaker-than-expected first-quarter results, with earnings per share at $6.44 and revenue of $18.02 billion both missing market estimates, according to Trader Edge.

The earnings miss triggered a series of analyst price target cuts and added pressure on the stock, which dropped significantly following the results. Despite the quarterly setback, the company maintained its full-year earnings guidance, signalling confidence in its longer-term outlook.

Quarterly Earnings Miss Estimates

For the first quarter of 2026, Lockheed Martin reported earnings per share of $6.44, falling short of the consensus estimate of $6.74. The figure also declined from $7.28 recorded in the same quarter last year, indicating a year-on-year contraction in profitability.

Revenue came in at $18.02 billion, missing analyst expectations of $18.38 billion and remaining largely flat compared to the previous year. The company attributed part of the revenue shortfall to one fewer working week in the quarter, which reduced the top line by several hundred million dollars.

Free cash flow turned negative during the quarter, coming in at -$291 million. The decline was driven by a combination of margin compression, fluctuations in working capital, and pressure from fixed-price contracts.

Additionally, the company reported a book-to-bill ratio of 0.6x, reflecting relatively weak order bookings during the period. Management cited timing-related factors for the softer bookings, though the figure contributed to cautious investor sentiment.

Analysts Cut Price Targets

Following the earnings release, multiple brokerages revised their price targets downward. RBC Capital reduced its target from $650 to $575 while maintaining a “Sector Perform” rating, citing incremental cost pressures and mixed near-term growth visibility.

Other firms including BNP Paribas Exane, Morgan Stanley, Deutsche Bank, and Susquehanna also lowered their targets. The consensus rating remains “Hold,” with an average target price of around $635, implying potential upside from current trading levels near $510.

Despite this implied upside, the prevalence of neutral ratings has kept investor sentiment subdued. The stock is currently trading below its 50-day moving average of $628 but remains above its 200-day moving average of $553.

Lockheed Martin reaffirmed its full-year 2026 earnings guidance, projecting EPS in the range of $29.35 to $30.25. This aligns closely with the sell-side consensus estimate of approximately $29.97 for the year.

The company’s long-term outlook continues to be supported by its defence programme pipeline. Planned increases in F-35 fighter jet purchases through 2030–31 are expected to support future production volumes. Additional developments include an agreement with Peru for the purchase of 12 F-16 Block 70 jets and ongoing participation in U.S. missile defence programmes.

The company also secured contracts to replenish Patriot missile inventories and continues to benefit from stable demand tied to defence spending.

Shareholding and Dividend Details

Institutional investors hold approximately 74.19% of Lockheed Martin’s shares. Among them, Vanguard Group reduced its stake by 17,369 shares in the fourth quarter but still holds 21.27 million shares, representing about 9.19% ownership valued at $10.29 billion.

Lockheed Martin maintains a quarterly dividend of $3.45 per share, translating to a yield of approximately 2.7%. The payout ratio stands at around 66.8%.

The stock has traded within a 52-week range of $410.11 to $692.00 and is currently positioned in the lower half of that band, reflecting recent downward pressure following the earnings release.

While the company’s long-term contracts and defence backlog remain intact, the latest quarterly performance and analyst revisions have weighed on near-term investor confidence, as per Trader Edge.