Lockheed Martin Stock’s Winning Streak Ends After Downgrade

Lockheed Martin stock is roughly flat year to date, coming into Tuesday’s session. (Federico Parra / AFP / Getty Images)

Key Points

• Morgan Stanley downgraded Lockheed Martin to Hold from Buy, lowering the price target to $543 from $630 a share.
• Lockheed Martin shares fell 1.6%, ending a 10-session winning streak at risk.
• Lockheed Martin’s stock is roughly flat year to date, trading at 16.5 times estimated earnings, compared with Northrop Grumman at 20 times.

Lockheed Martin stock has been, if not on fire, giving off a nice warm glow lately.

Coming into Tuesday trading, shares of the defense contractor had risen for 10 straight trading sessions. That streak ended, thanks in part to ratings changes at Morgan Stanley.

Analyst Kristine Liwag downgraded Lockheed to Hold from Buy, and lowered her price target to $543 from $630 a share.

Lockheed shares fell 1.6% on Tuesday, closing at $477.06, while the S&P 500 and Dow Jones Industrial Average fell 0.2% and 0.6%, respectively.

Lockheed’s run was the longest winning streak for shares since 2022, according to Dow Jones Market Data. The rally didn’t make much noise, though: it has been a string of modest gains, leaving Lockheed stock roughly 10% higher overall.

The defense sector is primed for another solid year in 2026, says Liwag.

“The sector provides good value as stocks are not reflecting the growth in [the] U.S. Defense budget,” she adds.

A strong 2026 would follow on a great 2025. Coming into Tuesday trading, the iShares Aerospace & Defense exchange-traded fund was up 44% year to date.

Lockheed stock, however, has lagged behind. Coming into Tuesday’s session, it was roughly flat year to date. That has left shares trading for about 16.5 times estimated earnings expected over the next 12 months. Liwag’s top pick, Northrop Grumman , trades for about 20 times.

The discount for Lockheed is justified, she says, because of slower-than-average expected earnings growth.

Other stocks, along with Northrop, look relatively more attractive than Lockheed, she says. Along with downgrading Lockheed, Liwag upgraded shares of General Dynamics and L3Harris Technologies to Buy from Hold.

Her General Dynamics price target went to $$408 from $385. Despite the positive call, General Dynamics shares closed at $337.49, down 0.9%. Her L3Harris price target went to $367 from $350, but that stock fell 2% to $282.84.

Liwag is coming back to the pack on Lockheed stock, which is relatively unpopular on the Street. Only 38% of analysts covering the company rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. Wall Street has worried about the company’s overreliance on the F-35 program, which accounts for roughly 25% of total revenue.

The Buy-rating ratios for General Dynamics and L3Harris are 56% and 72%, respectively.

Write to Al Root at allen.root@dowjones.com