Lockheed Martin Corporation LMT shares are trading lower on Monday after BofA Securities analyst Ronald J. Epstein downgraded the stock from Buy to Neutral and cut its price forecast from $685 to $485.

The analyst notes that on Friday, Lockheed Martin stocks took a hit after the White House and U.S. Air Force (USAF) selected Boeing over the company as the winner of the $20 billion contract for the Next Generation Air Dominance (NGAD) program, reported Reuters. This will replace Lockheed Martin's F-22 Raptor. 

The analyst writes that he, along with most industry experts and investors, anticipated a much higher likelihood of Lockheed Martin securing the program.

While defense budgets are expected to increase, concerns remain regarding Lockheed Martin’s recent earnings quality, the loss of all six next-generation manned tactical aircraft programs and the absence of near-term company-specific catalysts, adds the analyst.

The analyst lowered adjusted EPS estimates to $27.15 (from $29.20 prior) in 2025, $29.15 (from $30.30 earlier) in 2026 and $31.05 (from $31.35) in 2027.

Epstein has also cited a downward revision in his topline growth expectations and delayed expectations related to the profitability ramp-up for the aeronautics business.

Investors can gain exposure to the stock via First Trust Exchange-Traded Fund First Trust Indxx Aerospace & Defense ETF MISL and Pacer Solactive Whitney Future of Warfare ETF FOWF.

LMT Price Action: Lockheed Martin shares are down 1.58% at $432.74 at publication Monday.

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