Lockheed Martin faces $1.8B charges, negative cash flow, and a 10% stock drop despite strong demand. Find out why LMT stock is a Buy.

Lockheed Martin’s (NYSE:LMT) multi-year growth outlook is facing serious headwinds following a wave of unexpected charges and operational setbacks, prompting Truist Securities to downgrade the defense giant from Buy to Hold.

Lockheed Martin reported on Tuesday that its second-quarter profit plunged by about 80%, after the U.S. defense group recorded a pretax loss of $1.6 billion, mainly linked to a classified program within its Aeronautics segment,

Truist also flagged a “tax overhang of $4.6B” due to a dispute with the IRS. Lockheed has taken a $100 million P&L accrual but “fundamentally disagrees with the grounds for the claim” and is prepared to pursue legal action.

The company also cut its 2025 operating profit outlook by $1.5 billion to $6.65 billion. The charge included $950 million related to the undisclosed program and $570 million connected to issues with Canada's CH-148 Cyclone helicopter deal.

Lockheed Martin has disclosed a significant decrease in net earnings for the second quarter of fiscal 2025 (Q2 FY25), reporting $342m compared to the $1.64bn recorded in the corresponding period of the previous year.

Shares of Lockheed Martin ( NYSE: LMT) tumbled as much as 9% on Tuesday after the defense contractor reported sharply lower second-quarter earnings because of more than $1.6 billion in program-related charges, falling short of Wall Street expectations.

Major U.S. equities indexes were mixed Tuesday as investors reacted to the latest earnings reports and prepared for Big Tech results due tomorrow.