Shares of Lockheed Martin do not appear to be pricing in strong earnings growth, giving investors a good reason to buy them, according to UBS. The bank upgraded the defense company to buy from neutral in a Tuesday note, and hiked its price target to $674. That indicates a 28% gain from Friday’s close. Analyst Gavin Parsons said that Lockheed Martin is set to see growth across several business segments, setting the company up to potentially double-digit upside to earnings per share consensus estimates in 2028. “Growth in missiles/munitions – and others like F-35 sustainment, CH-53K,” referencing a Lockheed fighter jet and helicopter, “and Trident – drive a 9% revenue CAGR through 2028,” Parsons wrote in the note. “This is above consensus and does not appear priced in given the 15% discount vs. S & P500.” LMT YTD mountain Lockheed Martin year-to-date. He added that investors understand there will be strong growth among missiles and munitions. However, the potential for faster and more sustainable production, Parsons said, was something that investors had yet to price into the stock. Despite the U.S.-Iran war , Lockheed is only up 8% in 2026. In early March, shares were up almost 40% in the year, but are now off 22% from that high. But UBS’ prior neural rating was all about free cash flow, something that Parsons now has more confidence tat the company can grow to. “LMT needs to normalize the $1bn pension over-earn, but with ample FCF despite increased capex and limitations on buybacks, we see pension funding as a potential use of cash flow,” he wrote. “We model 38% free cash flow growth from 2025-2030E supported by earnings growth.” Analysts are split on Lockheed. LSEG data shows that 13 of the 24 who cover the stock rate it a hold, while another 10 assigned buy or strong buy ratings. One analyst has an underperform rating on shares. Shares ticked nearly 1% higher following UBS’ upgrade.
