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The analyst believes that LMT will struggle to outgrow its defense peers with large F-35 exposure where sales are flattish from here.
Akers says that LMT is still seeing supply chain impacts and expects these to continue through year-end. Delayed agreement on F-35 lot 15-17 deal affected sales and cash in the quarter, to be recovered after the contract is signed.
The analyst stated that LMT's new contract is not seen as margin dilutive. LMT's outlook assumes continued accelerated payments to suppliers.
While LMT did not provide an updated long-term sales outlook, it noted it will take 2-3 years for the "clutch to engage" in recent demand translating to sales (2024 and beyond), said Akers.
Morgan Stanley analyst Kristine Liwag also lowered Lockheed Martin's price target to $522 (32% upside) from $525 while maintaining the Overweight ratings on the shares.
Price Action: LMT shares are trading higher by 1.20% at $394.92 on the last check Wednesday.
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