The analyst mentions that as the largest defense contractor globally, LMT is often viewed as a proxy for the sentiment on the defense sector.
Herbert stated that the defense fundamentals have positively inflected. LMT will see LSD top-line growth due to a flat outlook for the F-35, timing of new program awards, and a maturing of its legacy portfolio.
New program wins could be positive catalysts, but stock reflects NGAD success, the analyst added.
Herbert believes that the current budget environment will support growth in the classified and existing programs of record.
Meanwhile, the analyst believes LMT will lag defense peers on a relative basis due to its slower top-line growth outlook and lack of near-term catalysts.
Price Action: LMT shares are trading lower by 0.77% at $426.35 on the last check Tuesday.
