Lockheed Stock Is Downgraded. It’s About China, the F-35, and Air Dominance.
Lockheed stock finished lower Thursday, after Deutsche Bank downgraded the shares, reversing a mid-2024 upgrade, as Chinese progress in developing jet fighters raises doubts about sales of the F-35.
“We’re downgrading Lockheed to Hold (from Buy) as we feel our prior thesis struggles to hold water and we have increased concern on the long-term support for F-35 in the face of China’s combat aircraft modernization efforts,” wrote Deuschle.
“We’re struggling to find a compelling upside case on estimates,” wrote Deuschle. What is more, he said he sees “the reveal of further advancements in combat aircraft capabilities by China as potentially undermining long-term [Department of Defense] demand for the F-35 aircraft.”
China recently published videos of its sixth-generation jet fighter. It looks a little like a UFO, with a diamond shape and no traditional tail fins. The F-35—which accounts for some 25% of Lockheed’s total sales—is a fifth-generation jet fighter.
“We’re downgrading Lockheed to Hold (from Buy) as we feel our prior thesis struggles to hold water and we have increased concern on the long-term support for F-35 in the face of China’s combat aircraft modernization efforts,” wrote Deuschle.
“We’re struggling to find a compelling upside case on estimates,” wrote Deuschle. What is more, he said he sees “the reveal of further advancements in combat aircraft capabilities by China as potentially undermining long-term [Department of Defense] demand for the F-35 aircraft.”
China recently published videos of its sixth-generation jet fighter. It looks a little like a UFO, with a diamond shape and no traditional tail fins. The F-35—which accounts for some 25% of Lockheed’s total sales—is a fifth-generation jet fighter.
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