Lockheed Martin Corp (NYSE:LMT) stock rose 1.39% (As on March 26, 11:19:08 AM UTC-4, Source: Google Finance) after Melius Research downgraded the company to Hold from Buy with a price target of $483, down from $603. Boeing (BA) had a win over Lockheed on the Air Force’s sixth generation fighter program, the firm tells investors in a research note. BofA downgraded Lockheed Martin to Neutral from Buy with a price target of $485, down from $685, after the White House and U.S. Air Force announced that they selected Boeing over Lockheed as the winner of the USAF’s Next Generation Air Dominance program. Analysts at Melius highlighted that Lockheed Martin’s future growth prospects are becoming more uncertain due to a series of competitive losses and growing efforts in Europe to decrease dependence on U.S. defense contractors. This could potentially restrict Lockheed’s export opportunities. Lockheed Martin, known for its F-35 fighter jets, has reached peak production rates for the aircraft. The company, which generated revenue of $71 billion in the last twelve months with a modest 5.14% growth rate, has faced setbacks as it lost to Northrop Grumman and Raytheon in securing key defense contracts. Other analysis reveals challenging gross profit margins of 9.88%, supporting Melius’s concerns about competitive pressures. Northrop Grumman won the contracts for the Stand-In Attack Weapon and Glide Phase Interceptor programs. Meanwhile, Raytheon was selected over Lockheed for the Long-Range Standoff Weapon program. Additionally, Lockheed was outperformed by Textron in the bid for the $70 billion Future Long-Range Assault Aircraft program, which aims to replace the Black Hawk helicopters.

These losses have led Melius to adjust their sales growth assumptions for Lockheed Martin and to reduce their target multiple to 17 times from the previous 21 times their 2027 ex-pension earnings per share estimate. Consequently, Melius has set a new price target for Lockheed Martin shares at $483, a decrease from the prior target of $603. This new target is based on their revised 2027 ex-pension EPS estimate of $28.39, slightly down from the former estimate of $28.70.

Furthermore, LMT has been downgraded by Bank of America analysts after the White House overlooked it for the US Air Force’s Next Generation Air Dominance Program, instead selecting Boeing. The analysts downgraded the stock to ‘Neutral’ from ‘Buy’ and lowered their price objective to $485 from $685. Bank of America expects Lockheed Martin shares to remain rangebound in the wake of last week’s announcement. “We had placed significantly higher odds on Lockheed Martin winning the program, as did most industry watchers and investors,” they wrote.