Lockheed stock offers investors a chance to buy the dip, according to Citi.

Wednesday morning, analyst John Godyn upgraded Lockheed shares to Buy from Hold. He raised his price target to $582 from $571.

Shares of the defense prime contractor rose 1.8% in early trading at $518.28, while the S&P 500 was down 0.1% and the Dow Jones Industrial Average was up 0.2%.

Coming into Wednesday trading, Lockheed stock was up 10% over the past 12 months but down 23% since the start of the war in Iran. A stock drop while bombs are falling feels counterintuitive, but the war was relatively unpopular, raising the chances that Congress shifts to Democrat control, which could weigh on defense spending.

"Investors are reluctant to buy the dip on defense because of top-down concerns regarding 'Peak Defense' and a possible 'Blue Wave.' We don't blame them because we can't rule out those risks," wrote Godyn. "But they do appear to be increasingly priced in. Furthermore, we think that bears may underappreciate just how negative and apathetic sentiment has become."

A cheap valuation can overcome many risks. Lockheed stock now trades for about 17 times earnings expected over the coming 12 months, according to FactSet. Lockheed traded for closer to 22 times at the start of the war, similar to the S&P 500 multiple.

The company also has "improving fundamentals," added Godyn, including exposure to missiles, which the U.S. military wants more of.

There is another, more technical reason to look at Lockheed stock, says Godyn. Shares dropped more than 15% in the second quarter. Lockheed, excluding the 2008 financial crisis, has dropped by double-digit percentages nine prior quarters since 2009. Shares have rebounded during the next quarter seven times, with double-digit gains six times.

The risk/reward for the stock looks more favorable than it has in a while.

Overall, 36% of analysts covering Lockheed stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 typically ranges from about 55% to 60%. The average analyst price target for Lockheed shares is about $618.

Write to Al Root at allen.root@dowjones.com

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July 01, 2026 11:43 ET (15:43 GMT)

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