We're Raising Our Price Target for This Portfolio Defense Play

While we wait for this morning’s Services PMI reports and what they will tell us about the pace for that part of the economy during September, we are once again lifting the portfolio’s price target for Lockheed Martin LMT.

Lockheed shares have been a strong performer, up just over 30% since mid-July, amid rebounding F-35 deliveries, increasing global defense spending, and more recently escalating conflict between Israel and Iran. But with a fresh 4% dividend increase and an additional $3 billion added to its buyback program, Lockheed has given us yet another reason to like the shares.

The company’s new quarterly dividend of $3.30 per share will be paid on December 27 to shareholders of record as of December 2. For those keeping track, this is Lockheed’s 22nd consecutive annual dividend increase, which puts it on a trajectory to joining the Dividend Aristocrats in the next few years. Adding in this latest increase in the buyback program, Lockheed has around $10 billion in firepower for share repurchases, which speaks to its upcoming cash generation as its multi-year backlog is converted into revenue.

While we have yet to receive Lockheed’s updated multi-year delivery schedule, we have enough to lift our price target to $625 from $575 and boost our LMT panic point to $515 from $475.

When Lockheed shares its multi-year delivery plan, potentially as soon as October 22 when it reports its September-quarter results, we’ll revisit this new price target as needed.

Earlier this week, we noted LMT shares are overbought, which means we would caution members from committing fresh capital at current levels. Instead, we’re inclined to let this morning’s dividend and buyback news as well as Israel’s vow for a “very strong” response to Iran’s recent attack ripple through LMT shares and other price targets before potentially locking in some of our hefty gains.

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At the time of publication, TheStreet Pro Portfolio was long LMT.