Lockheed Martin’s (LMT) recently approved $3 billion increase in its buyback program will drive positive investor sentiment as it supports the company’s confidence in improving free cash flow, RBC Capital Markets said in a note Monday.
The investment bank increased its price target on Lockheed’s stock to $675 from $600.
“We believe a shareholder-friendly capital allocation strategy on the back of the strong FCF generation will continue to be a positive for sentiment,” RBC said, noting that the company is guiding to $6.2 billion free cash flow for 2024, just flat from a year earlier.
This comes alongside major margin opportunity from Lockheed’s ongoing deliveries of the F-35 fighter jets, and as defense stocks are expected to outperform at a time of lower interest rates, RBC said.
Additionally, Lockheed’s Q3 results are expected to be positive and well-received by investors, according to the note. The results are scheduled for release later this month.