Fresh Russia-Ukraine Feud Brings Spotlight on Lockheed

The long-standing war between Russia and Ukraine, particularly since Russia launched its full-scale invasion in February 2022, has once again intensified in recent weeks after ceasefire talks got largely stalled. With the United States being a key supplier of weapons to Ukraine, Lockheed Martin Corp. LMT stands to benefit from the recent escalation between the two nations, as a large portion of the weapons supplied to Ukraine are manufactured by it.

In particular, Lockheed’s Patriot missile system plays a critical role in defending Ukraine against Russian missile and drone attacks. Its advanced radar and interceptors have been used to shoot down Russian ballistic missiles, including hypersonic Kinzhal missiles. 

To this end, it is imperative to mention that in November 2024, Lockheed won a contract from the U.S. Army to support increasing the production capacity of its Patriot Advanced Capability – 3 (PAC-3) Missile Segment Enhancements (MSEs) to 650 per year, to meet the rapidly growing global demand for Patriot missiles. No doubt, a major portion of this demand is driven by Ukraine’s heightened need for Patriots, which remain its most effective defense against Russian ballistic missiles. 

This surge in demand gets reflected in Lockheed’s ongoing production ramp-up efforts, as evidenced by its 30% increase in PAC 3 output in 2024 and a further 20% expansion targeted for 2025. 

Apart from the Patriot missiles, the HIMARS (High Mobility Artillery Rocket System) is another Lockheed-built weapon used by Ukraine. Notably, Ukraine used almost 38 HIMARS to target Russian artillery, headquarters and troop concentrations in March 2025 (as per a Forbes report). Notably, LMT has already increased annual HIMARS production capacity from 48 to 60 and aims to further increase it to 96 by the end of 2025. 

With the recent escalation, the company may further enhance its production capacity for Patriots and HIMARS, thereby bolstering its revenue growth prospects.

Other Stocks Warranting a Look

Other defense stocks, such as RTX Corp. RTX and General Dynamics GD, which also supply and upgrade weapons for Ukraine, are expected to see heightened demand amid the recent escalation in Russia-Ukraine hostility. 

Notably, Ukraine utilizes NASAMS (National Advanced Surface-to-Air Missile System) against Russian cruise missiles. The NASAMS system consists of RTX’s AN/MPQ-64 Sentinel radar, AMRAAM missile, AMRAAM-ER missile and AIM-9X missile. 

On the other hand, General Dynamics-built Abrams tanks have been supplied to Ukraine, which they have used against Russia in frontline operations. Furthermore, in March 2024, it was announced that the company’s General Dynamics European Land Systems (“GDELS”) unit is upgrading Spanish Leopard 2A4 tanks to ensure their operational readiness for use by Ukraine.

The Zacks Rundown for LMT

Shares of LMT have gained 1.9% in the past year compared with the industry’s 17.8% growth.

The company’s shares are trading at a discount on a relative basis, with its forward 12-month Price/Earnings being 16.43X compared with its industry’s average of 26.72X.

The Zacks Consensus Estimate for LMT’s 2025 and 2026 earnings has moved south over the past 60 days.

LMT stock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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