Summary

• The FY27 defense budget nearly doubles Research & Procurement spend, with F-35 up 62%, PAC-3/MSE up 8x, and THAAD up 9x—all core Lockheed Martin programs.
• LMT's backlog stands at $186.4B, with $63B recognizable in the next 12 months; the international sales mix is expanding to 31%.
• Margin headwinds from supply chain disruptions, tariffs, and rare earth shortages from the Strait of Hormuz closure.
• Other risks include midterm election-driven budget uncertainty, federal debt concerns, and Golden Dome cost controversy.
• Conservative DCF implies 18% upside to a fair value of $625, and current weakness presents an attractive long-term entry point.

Investment Thesis

Lockheed Martin (LMT) had consistently been the world's largest defense contractor for several years. It designs, manufactures, and sustains advanced military equipment, including its flagship F-35 fighter jets, C-130J Hercules aircraft, and PAC-3/MSE missile interceptors, to name

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