Lockheed Martin Raises 2026 Forecast on Missile Demand

What happened

Lockheed Martin increased its 2026 revenue guidance to $79.75 billion to $81.75 billion, up from a prior range of $77.5 billion to $80 billion, exceeding analyst expectations of $79.14 billion. The company reported a total backlog of $230.4 billion, representing a 38.3% increase from $166.5 billion a year earlier. In the second quarter, missiles and fire control revenue rose nearly 20% to $4.1 billion, driven by increased production of PAC-3 and precision strike missiles. The segment was also boosted by higher THAAD missile interceptor production following a $35 billion U.S. government contract signed in June to quadruple output. CEO Jim Taiclet noted the government is providing greater flexibility to accelerate production timelines.

Why it matters

The raised guidance reflects Lockheed's position to benefit from sustained Pentagon demand as global conflicts deplete U.S. weapons stockpiles. According to Pentagon data, the U.S. has used more than 50,000 rockets, missiles and rocket-propelled munitions since 2022 in Ukraine and Iran-related conflicts. President Trump has proposed a record $1.5 trillion military budget for fiscal 2027, and the House passed a defense bill authorizing $1.15 trillion in military spending. Lockheed's missile systems, including PAC-3, THAAD, and precision strike missiles, are central to Pentagon restocking efforts. The company's CFO indicated active discussions for partnerships to scale production faster, particularly in Europe, suggesting additional growth opportunities beyond current contracts.

Bigger picture

The defense industry is experiencing a broad demand surge as military conflicts drive inventory replenishment. Peer contractor RTX similarly raised its 2026 guidance, with Raytheon weapons sales up 18% and backlog rising 22% to $289 billion. About $7 billion of RTX's first-half bookings came from European customers alone. The Trump administration is pressing contractors to accelerate production, with Deputy Secretary of Defense Steve Feinberg emphasizing speed. The House defense bill's unprecedented spending authorization signals sustained government commitment to rebuilding arsenals. Both Lockheed and RTX topped second-quarter Wall Street estimates, underscoring the sector's strong operational performance amid heightened geopolitical tensions.

What to watch

Key signals include progress on Lockheed's THAAD production ramp-up under the June contract, which aims to quadruple output. Watch for announcements of new European partnerships mentioned by CFO Evan Scott to scale missile production. Monitor whether the Senate aligns with the House's $1.15 trillion defense spending authorization and whether Trump's proposed $1.5 trillion fiscal 2027 military budget gains traction. Track Lockheed's missiles and fire control segment performance in upcoming quarters to assess whether the 20% growth rate is sustainable. Also watch for additional international orders, particularly from Middle Eastern and European customers, as geopolitical tensions persist.