July proved to be an excellent month for Lockheed Martin (NYSE: LMT), a leading aerospace and missile technology manufacturer. As the top defense contractor in the United States, Lockheed Martin generates nearly $60 billion in annual revenue from domestic sources alone.
The majority of July’s gains occurred in the latter half of the month following the company's impressive earnings report. Lockheed Martin announced $18.12 billion in revenue for the quarter, marking a 9% year-over-year increase and surpassing analyst estimates of $17.01 billion. The company also reported an earnings per share (EPS) of $7.11, significantly higher than the anticipated $6.45 EPS.
In response to these strong results, Lockheed Martin has raised its guidance for the remainder of 2024, enhancing its projections for sales, operating profit, and EPS. During the earnings call, CEO Jim Taiclet addressed concerns regarding the lower than expected F-35 delivery output. He expressed confidence in the company's ability to meet its delivery target of 75 to 110 F-35s for the year.
Over the past few years, Lockheed Martin, along with other defense contractors such as RTX Corporation (NYSE: RTX) and Boeing (NYSE: BA), has faced margin pressures due to supply chain issues and rising raw material costs.
Geopolitical events like the war in Ukraine and the conflict in Israel continue to drive defense spending. Since February 2022, the United States has provided over $44 billion in security assistance to Ukraine. Additionally, in May, the U.S. supplied Israel with billions of dollars in weapons and bombs to counter attacks from Hamas.
Following the earnings report, Lockheed Martin received several upgrades. Bank of America analysts raised their price target from $465 to $635, suggesting a potential upside of nearly 16%.
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