Deutsche Bank Raises Lockheed Martin to 'Buy'

Analyst Christopher Mecray cites valuation, strong budget positioning, and a possible interest in defense shares amid tensions with Iraq

Deutsche Bank upgraded Lockheed Martin (LMT ) to buy from hold.

Analyst Christopher Mecray says his upgrade was based on valuation upside, strong budget positioning, ongoing peer-leading execution and a possible near-term interest in defense shares on the increasing likelihood of a war with Iraq. Mecray says the government's February budget submission is likely to include all the company's major programs, including both next-generation fighters. He says non-aircraft units also are firm.

Mecray notes a recent pull-back in Lockheed Martin may have been overdone, given the strong growth outlook irrespective of the Iraq situation. He sees 80 cents in fourth quarter earnings per share, $2.55 for 2002, and $2.45 for 2003. He notes his $70 12-month target implies 28% upside potential.

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