Lockheed Martin's 'Space Growth' Sets Foundation For 2023 Upside, Credit Suisse Says

Credit Suisse analyst reiterated an Outperform rating on the shares of Lockheed Martin Corp LMT and raised the price target from $510 to $550.
The company reported Q1 results above Street view across all major line items, including sales, EBIT, EPS, and free cash flow.
The analyst said the company is arguably hitting its stride, with sales beating Street in the last two quarters following consistent misses from 1Q-3Q of 2022.
The analyst thinks LMT may be positioned to return to growth in 2023 and more meaningfully accelerate growth in 2024.
The analyst vouches that Space Systems comprises the bulk of the upside case for LMT sales in ‘23, with optionality at MFC, given demand trends / bookings.
The analyst noted that portions of LMT’s business use performance-based billings rather than traditional progress payments.
The analyst expects sales to ramp linearly through the year at Aeronautics/MFC, with RMS more 2H weighted.
The analyst sees 2Q free cash flow below 1Q given cash tax headwinds and share repurchases to ramp in 2H.
The analyst lists execution on fixed price contracts, sector rotation, and lower DoD budget growth as potential risks.
Price Action: LMT shares are trading lower by 0.74% at $497.70 on the last check Wednesday.

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