Lockheed Martin climbed early Monday after receiving an upgrade from JPMorgan. Meanwhile, defense stocks rose modestly after U.S., British and Israeli defenses on Saturday knocked down a barrage of missiles and drones launched by Iran against Israel.
JPMorgan on Monday upgraded Lockheed Martin to overweight from neutral and hiked its price target to $518 from $475, according to a research note reported by The Fly.
The defense industry received the fiscal 2024 budget it needed last month, which JPMorgan expects to provide some supplemental funding for Ukraine, Israel and Taiwan. Any change in market momentum would likely leave defense stocks well-positioned in relative terms, the research note said.
However, Lockheed's inability to deliver F-35 fighter jets has been an overhang, as well as pending charges for a classified missile program. Still, there's potential for these risks to ease, according to JPMorgan.
Elsewhere, the U.S. Missile Defense Agency on Thursday awarded Lockheed Martin a contract worth up to $4.1 billion to field, maintain and upgrade its battle command system, the Command and Control, Battle Management and Communications (C2BMC) system. The follow-on contract runs from May 1, 2024, through April 30, 2029, with an option to extend it through April 30, 2034.
Previously, Lockheed Martin in August 2021 received a $157 million contract to upgrade the C2BMC system, Defense News reported.
The C2BMC connects a variety of systems and radars to form a global missile defense architecture for protection against long-range attacks.
Iran Hits Back Against Israel
Separately, Israel, the U.S. and other allies on Saturday shot down 99% of the roughly 350 drones and missiles during an attack by Iran, which resulted in slight damage to an Israeli military base. Reports indicate one casualty in the attack.
Tehran had vowed retaliation for Israel's April 1 strike on its consulate in Damascus. The well-telegraphed attack may have been an effort to show a forceful response while minimizing the risk of much-wider escalation.
President Biden and fellow Group of Seven leaders "firmly condemned" Iran's attack in a Sunday statement, but appealed for calm. Israel's war cabinet met to mull its options.
Israel plans to delay its ground offense in Rafah, Gaza's southernmost city, CNN reported. More than 1 million people are currently sheltering in Rafah. Israel was set to start preparing for the ground invasion this week prior to Iran's attack, according to CNN.
Lockheed Martin, Defense Stocks Climb
Lockheed Martin rose about 1% early Monday, toggling into positive territory for its year-to-date performance. LMT has climbed more than 10% from its mid-February lows.
RTX also advanced around 1% Monday morning. Shares are extended above a cup-with-handle buy zone after breaking out on March 14. RTX rallied has nearly 21% in 2024.
Israel-based defense manufacturer Elbit Systems jumped 3.4% early Monday to rebound above its 21-day exponential moving average and narrow its year-to-date loss to 1%. ESLT stock fell for four consecutive trading days prior to Monday.
Northrop Grumman climbed 1% Monday to retake its 50-day line. NOC stock is trading in the lower half of a 26-week flat base with a 496.89 buy point.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
