The defense stock lost the contract to make the Air Force's new jet fighter
Lockheed Martin Corp (NYSE:LMT) stock is down 2.8% to trade at $427.50 at last check, following a series of bear notes. BofA Global Research and Melius Research downgraded the equity to "neutral" and "hold" from "buy," respectively, with the former also cutting its price-target to $485 from $685. This negative attention comes after President Donald Trump awarded Boeing (BA) a contract to make the Air Force’s next jet fighter.
Analysts were bullish coming into today, with 12 of 22 firms in coverage calling LMT a "buy" or better. Plus, the 12-month consensus target price of $532.09 is still a 23.5% premium to current levels. A further unwinding of this optimism may pressure Lockheed Martin stock lower.
LMT is gapping below recent support from the 20-day moving average, which contained its pullback from a failed attempt to conquer the $500 level earlier this month. The shares are on track for their third-straight daily loss, and shed more than 26% in the past six months.
The options pits are buzzing, with 3,217 calls and 1,181 puts traded so far today -- triple the volume typically seen at this point. The most popular contract is the weekly 3/28 450-strike call, where new positions are being opened.
It's also worth noting that defense stock has tended to outperform options traders' volatility expectations in the past year, per its Schaeffer's Volatility Scorecard (SVS) of 97 out of 100.