Lockheed Martin shares led the S&P 500 after their best day in more than six years

Shares of U.S.-based Lockheed Martin, the world’s largest manufacturer of weapons and military equipment, jumped 10.5% on July 23 and led gains in the S&P 500. The company’s stock hadn’t risen this sharply since March 2020. Investors reacted to a sharp rise in quarterly earnings, results that beat forecasts, and an upward revision of guidance for 2026, according to MarketWatch.

Lockheed Martin's net income for the quarter ended June 28 rose 5.4-fold to $1.84 billion. Earnings per share rose from $1.46 to $7.94, compared with a consensus estimate of $7.19, according to FactSet. Revenue rose 10.5% to $20.06 billion, compared with the expected $19.34 billion.

The defense giant received new orders worth $65 billion, bringing its order backlog to a record $230 billion. Sales at the aviation division, which manufactures stealth fighters, rose 9.3% to $8.11 billion, beating the consensus estimate of $7.61 billion. Revenue for the missile systems and fire control division increased by 19.5% to $4.1 billion, also exceeding expectations.

Lockheed attributed its strong performance not only to increased demand but also to a decision made at the “right time” to accelerate the production of missiles and other defense systems, according to MarketWatch. This allowed the company to ramp up production amid escalating tensions in the Middle East and rising defense spending in Europe.

Lockheed raised its revenue forecast for 2026 from $77.5–80 billion to $79.75–81.75 billion and also revised its earnings per share guidance upward. The new estimates reflect confidence that the company’s strategy is “gaining momentum” and will be able to deliver “sustained profitable growth over the next few years,” CEO Jim Taiclet said during a conference call with analysts.

Sharp fluctuations are unusual for Lockheed: over the past 12 months, its stock has fluctuated by more than 5% in a single trading session only once. The previous notable move occurred three weeks ago: the stock rose 3.8% after Lockheed announced several major defense contracts and Citi upgraded its rating to “buy,” notes StockStory.

The U.S.-Israel war against Iran has not benefited Lockheed Martin or other defense contractors: the company has faced disruptions in shipping products to customers in the Middle East, according to MarketWatch. On March 2, the first trading day after the war began, Lockheed’s stock closed at a record high. However, compared to the end of February, it had lost about 13%.

A focus on the defense sector, represented by Lockheed, has become a new investment theme in Freedom Broker’s strategy for the third quarter. Freedom identified the company as a beneficiary of rising defense spending and demand for missile systems and fighter jets. It also noted support from the Pentagon: according to the broker’s estimates, funding for key programs through 2032 is expected to grow by approximately 30% per year.

Currently, the consensus analyst rating for Lockheed shares is “Overweight” (equivalent to a “buy” recommendation). The average price target of $616 per share, calculated by FactSet based on estimates from 25 analysts, implies an upside potential of 8.3%.

This article was AI-translated and verified by a human editor