Analysts See 33% Potential Stock Gains For This Defense Giant

Morgan Stanley upgraded Lockheed Martin (LMT) to Overweight, raising its price target to $835 from $690. The move follows a F-35 framework agreement with the Pentagon, which Morgan Stanley believes reduces risk for investors. LMT's stock rose 5.16% on October 26, 2026, and has gained 15.89% since October 19. The company reported strong quarterly earnings, with sales up 11% and EPS beating estimates. However, the full impact of the F-35 deal depends on congressional approval.

The US Air Force awarded Lockheed Martin a $694m contract for the AGM-183A ARRW hypersonic weapon, advancing it to production. The weapon, designed by Lockheed Martin, is intended for standoff strikes against defended targets. The Air Force has not disclosed delivery details or timelines, citing operational security.

Lockheed Martin CEO Jim Taiclet stated on an earnings call that the F-35 will remain the dominant US fighter for the next decade. The company aims to add sixth-generation technologies to the F-35, achieving 80% of a new fighter's capabilities at 50% of the cost, under a 10-year Pentagon deal covering 850 airframes. Lockheed plans to leverage its Skunk Works division for these upgrades, despite recent losses to Boeing.

Lockheed Martin (LMT) is developing a longer-range version of the US Army's Precision Strike Missile (PrSM), targeting a 621-mile range. The PrSM Increment 4 variant will use advanced propulsion from L3Harris, potentially doubling the baseline range. Lockheed has invested over $300 million in propulsion and manufacturing. Flight competitions are planned for 2027-2028 to evaluate designs.

Canada received its first Lockheed Martin F-35A fighter jet without ceremony. The RCAF stated it is developing capabilities to meet future challenges. Canada is committed to 16 F-35As and is discussing a potential purchase of Saab's JAS 39 Gripen E fighters. Canada has paid CAD $197 million of the CAD $935 million committed for the first four jets and long-lead items for eight more.

Lockheed Martin (LMT) shares rose 5.1% on October 26, 2026, driven by a Morgan Stanley upgrade and strong sales of F-35 jets and missiles. Q3 2026 earnings per share were $7.97, beating estimates, with revenue of $20.7 billion. Management raised its 2026 sales outlook to $80-82 billion and reported a record backlog of $292 billion.