Lockheed Martin Stock (LMT) Pulls Back despite $767M in New Defense Deals — Here's Why

Shares in Lockheed Martin (LMT) failed to get off the ground on Thursday despite the defense contractor securing about $767 million from three new defense contracts amid accelerating contract momentum. The reaction suggests investors remained unconvinced by what Wall Street sees as a cash flow and pension debt problem.Claim 70% Off TipRanks This Holiday SeasonUnlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential What Are the New Contracts For? The largest of the new deals is a provisional contract from the U.S. Air Force that is worth up to $328.5 million. As part of the contract — which was arranged under the U.S. Foreign Military Sales (FMS) program — the defense and aerospace manufacturer will work out of Florida to procure and deliver 55 long-range heat-sensing pods plus the pods' onboard computers and protective cases to meet the urgent operational needs of the Taiwan Air Force. These are technologies mounted on fixed-wing aircraft such as fighter and attack jets. The second award is a modification of its existing contract for the maintenance of the U.S. Navy's ship-defense system called the Aegis Combat System (AEGIS). Lockheed Martin has been awarded an additional $297.49 million to continue its support efforts for the system throughout 2026, while also providing integration support for the system's latest "Base 10" software/hardware version, among others. The last contract is worth $142.62 million and comes from the Missile Defense Agency of the U.S. Department of Defense. The arrangement is also a modification contract under the FMS, but this time, the goal is to help maintain and support two of the United Arab Emirates' Terminal High Altitude Area Defense (THAAD) batteries — this refers to mobile U.S. anti‑ballistic missile defense units designed to intercept ballistic missiles in their terminal phase. The deal is expected to last until August 2028. Last month, Lockheed Martin also secured several other contracts, including $10 billion for the expansion of the C-130J aircraft and $3.63 billion in a modified U.S. Navy contract to support the delivery of new F-35 fighter aircraft systems. JPMorgan Sees Free Cash Flow and Pension Risks in 2026 Recently, JPMorgan analyst Seth Seifman downgraded LMT stock to a Hold despite raising his price target by 11% to $515 per share, implying less than 7% upside. Seifman, who maintained a largely positive outlook for the sector for 2026, blamed his bearish rating on JPMorgan's internal forecasts for Lockheed's cash generation in the years ahead being lower than what most other analysts are assuming. The five-star analyst sees pension‑related items impacting Lockheed's free cash flow generation in 2027. To address the issue, Lockheed last month transferred about $900 million of its pension obligations to several insurance companies. Is LMT a Good Stock to Buy? On Wall Street, Lockheed Martin's shares continue to carry a Hold consensus rating based on four Buys, nine Holds, and one Sell issued by 14 analysts over the past three months. However, the average LMT price target of $524.93 implies about 9% upside from current trading levels.