Zacks Investment Research downgraded shares of Lockheed Martin Corp. (LMT) from OUTPERFORM to NEUTRAL on November 17, 2014, with a target price of $196.00.
We are downgrading our recommendation on Lockheed Martin Corp. to Neutral from Outperform. In the third quarter, this defense prime failed to meet the top-line on Street expectation. Revenues also declined year over year due to lower volumes on various programs. A pension headwind arising from HATFA, which delays recovery of prior pension contributions and dampens near-term earnings, also added to the woes. Lockheed stated that it expects 2015 revenues to decline in the low single digits. It also expects lower cash from operations for the year compared with its previous forecast. Yet, Lockheed Martin's better-than-expected third-quarter earnings were commendable considering the severe pressure on the U.S. military budget. Its raising of the full-year guidance is all the more encouraging. Lockheed also got a boost from its recent decision to freeze its defined benefit pension plan, which will aid earnings over the long term. The healthy dividend yield and stable cash flow will likely keep the stock defensive in spite of budget uncertainties.
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