On Friday, Truist Securities analyst Michael Ciarmoli upgraded Lockheed Martin shares to Buy, assigning a $605 price target that implies a 12% upside over the next 12 months, in addition to a dividend yield approaching 2.7%. Ciarmoli cited the defense giant’s underperformance in 2025 as having created a compelling risk/reward profile for 2026, noting that a rally to his target price would mark a significant rebound from the stock’s recent trading range.

The upgrade follows the award of a substantial Patriot missile contract—expected to boost revenue and gross margins in Lockheed’s missiles and fire control segment—and President Trump’s proposal to expand the U.S. defense budget to $1.5 trillion for fiscal 2027. These developments, combined with ongoing geopolitical tensions in Europe and the Indo-Pacific, are projected to support program production ramp-ups and drive incremental free cash flow over the next two years.

Despite these positive catalysts, Lockheed Martin trades at a premium valuation, carrying a 1.6x multiple of trailing sales and 28.5x trailing earnings, with a forward PEG ratio of 2.4 based on sub-12% expected growth. Investors should consider that further share price appreciation could be limited if revenue or margin expectations falter, making the stock’s current valuation the primary risk to achieving the full projected return.