The announcement follows Lockheed’s solid first quarter earnings results. LMT reported Q1 GAAP EPS of $6.08, beating the Street consensus by $0.28, while revenue of $15.65B (up 9.4% year-over-year) beat by $580M. Indeed, all segments beat expectations, mostly on strong sales ($0.6B over estimates).
Most impressively, the company also held its 2020 free cash flow guide of $5.9B+ while only slightly reducing its 2020 sales midpoint by $375MM-mainly for COVID-19 related supplier disruptions on F-35 production.
“LMT’s surprising Q1 beat and 2020 guide reiterates for EPS, FCF and bookings suggest it likely is relatively the “safest haven” in the defense sector” cheered Cowen & Co analyst Cai Rumohr following the earnings report.
“Scarcity value merits its sector high 15.1x TEV/EBITDAP” the analyst added, as he reiterated his LMT buy rating and $410 price target (8% upside potential). However, despite the robust start to the year, Rumohr shaved his EPS estimate by 10¢ to $24.15, arguing that Q2 will likely feel the worst of the COVID-19 impact.
Overall, LMT scores a Moderate Buy rating from the Street with 11 recent buy ratings vs 4 hold ratings. Meanwhile, with shares down just 2% year-to-date, the $439 average analyst price target translates into15% upside potential from current levels. (See Lockheed’s stock analysis on TipRanks).
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