Lockheed Martin (LMT) reported Q1 earnings that fell short of Wall Street expectations, fueled by persistent cost overruns and a significant miss in operating profit, RBC Capital Markets said in a report Friday.
Diluted earnings per share of $6.44 missed estimates and revenue of $18 billion was flat and slightly below consensus, while bookings were weak at 0.6x, RBC said.
RBC highlighted broader "negative" estimate-at-completion adjustments across multiple programs, including $125 million on the F-16, $55 million on the C-130, and about $50 million in the Rotary and Mission Systems segment, mainly tied to the CH-53K and Seahawk. The firm said "continued EAC headwinds" is decreasing investor confidence following "recent charges" in classified aeronautics and missiles programs, according to the report.
Lockheed Martin maintained its 2026 guidance, implying about 6.4% revenue growth for the remainder of the year and improved segment margins of around 11.1% from the Q2 through Q4. The outlook also suggests roughly $7 billion in free cash flow for the rest of the year, though the firm said execution remains a key "watch item."
RBC maintained its sector perform rating on Lockheed Martin and lowered its price target to $575 from $650, citing ongoing execution risks across much of the portfolio despite stronger prospects in the missiles business.
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