Updated Aug 6 at 2:01pm ET.
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Bernstein set a price target of $653 for the company. This is slightly above the average analyst target of $643. While a target is just an analyst's estimate of what a stock should be worth, it suggests they see room for the stock to rise from its current price of about $566.
Source: Bernstein
The company entered into a $3 billion framework agreement with the U.S. Department of War and Lockheed Martin. The deal is designed to expand how many missile-interceptor parts the company can build and how fast it can deliver them.
This is a clear win for the company's defense business. It provides a multi-year stream of work and reinforces its role as a critical supplier for national defense. For long-term owners, this adds more certainty to the company's future revenue and helps fill its already large backlog of orders.
Source: GlobeNewsWire
Susquehanna lowered its price target for the company by about 17 percent, moving it from $785 down to $655. While the firm still has a positive rating on the stock, this is a significant cut to what they think the shares are worth.
The new target is now much closer to the average analyst target of $643. This adjustment likely reflects a more cautious view on how quickly the company can turn its massive backlog of orders into actual profits, especially as it manages high costs on some of its newer defense programs.
Source: Susquehanna
The company reported second-quarter earnings of $7.68 per share, which was better than the $6.82 analysts expected. Revenue rose 5 percent from last year to $10.9 billion. The most important number was the backlog, which is the total value of signed contracts for future work. That hit a record $105 billion, giving the company years of guaranteed revenue.
Management also raised its expectations for the full year. They now expect sales to reach about $44 billion and adjusted profits to be higher than previously thought. This growth is being fueled by high demand for weapons and defense technology. While the stock fell on the day of the report, the business itself is showing strength by winning more work and raising its own targets.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company started construction on a new site in Utah, where it is already the largest defense contractor. This facility will support its work on strategic deterrence, which refers to the U.S. nuclear weapons programs that are meant to prevent conflict. This move is a physical sign of the company's long-term commitment to these massive, multi-decade government programs. While it doesn't change the financials today, it shows the company is investing in the infrastructure needed to handle its record-high backlog of work.
Source: GlobeNewsWire
Analysts recently lowered their price targets for the stock throughout late July. Most analysts rate the stock a buy, and the average target of $643 suggests a 13% gain from the current price.
The company has a habit of beating expectations, clearing the bar in seven of the last eight quarters. This suggests management is conservative with its forecasts and reliable at hitting its numbers.
| Expectation | |
|---|---|
| EPS | $7.14 |
| Revenue | $11.13B |
GlobeNewsWire · Press release · Aug 3
Seeking Alpha · Opinion · Jul 23
Seeking Alpha · Opinion · Jul 21
Forbes · Jul 21
Barrons · Jul 21
WSJ · Jul 21
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