Shares of Lockheed (LMT) Tumble as FY10 Outlook Disappoints

Lockheed Martin (NYSE: LMT) today prepared investors for a drop in 2010 earnings after posting a quarterly profit ahead of Wall Street estimates. The defense contractor reported third-quarter EPS of $2.07, beating the estimate of $1.83. Third-quarter revenue was reported at $11.1 billion, falling just short of the $11.4 billion consensus. Lockheed foresees a fiscal 2010 EPS of $7.05 to $7.25, compared to the adjusted fiscal 2009 EPS estimate of $7.40 to $7.60.

After closing at $76.99 yesterday, Lockheed Martin shares have dropped 6.14% to $72.26 today.

An analyst at Goldman Sachs, Noah Poponak, recommends a cautious approach to Lockheed going forward. “It is difficult to find any positives in LMT’s results: 3Q ops missed, 2009 ops guidance was unchanged, bookings were weak, cash flow guidance was revised down, and the company is buying back less stock than it used to,” Poponak stated.

The concern that President Obama and the current administration will continue to slow investment in traditional weapons may be weighing on the stock today. Order flow is also a concern for Lockheed, as orders coming out of the U.S. Department of Defense are weak.

FBR Capital's Patrick McCarthy noted that the outlook for fourth quarter revenue and the FY2010 EPS guidance is well below the Wall Street consensus. Despite the few concerning comments, McCarthy expects that Lockheed will outperform in the market.

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