Lockheed Martin may rally following a deal to continue producing fighter jets for the U.S. Department of Defense, according to Morgan Stanley. The investment bank upgraded the defense contractor to overweight from equal weight. It also raised its price target on shares to $835 from $690, suggesting 38% upside from Friday’s close. Lockheed Martin said last week it reached a 10-year framework with the U.S. government regarding the company’s F-35 Lightning II stealth fighter production. This “takes significant risk out of the stock,” analyst Kristine Liwag said in a note to clients. “Missile ramp on-pace, driving mid-teens [missiles and fire control] growth, providing upside.” LMT YTD mountain LMT year to date The announcement provides “a significant derisking event for the stock, which had previously been weighed down by concerns that F-35 could be a ‘billpayer’ in the U.S. defense budget to fund missile expansion. 3Q26 earnings also provided positive news on LMT’s munitions production ramp,” the analyst said. Lockheed reported Thursday third-quarter earnings that beat analyst expectations. Shares rallied nearly 7% that day and ended last week up more than 9%. Liwag also noted that Lockheed Martin’s partnerships with newer defense technology players, including Hadrian, support faster production and could help protect the company from disruption by newer defense manufacturers. Morgan Stanley’s call falls in line with consensus on Wall Street. Of the 26 analysts covering Lockheed Martin, 13 have a buy or strong buy on the stock, while 12 have a hold rating on it, LSEG data shows. Shares have popped 25% in 2026.
