Lockheed Martin shares rise after a Goldman upgrade and listing as a top stock

  • Goldman upgrades the defense giant to buy from neutral and places it on the firm's so-called conviction list of favorite stocks.
  • "The recent pullback in shares makes valuation more attractive," Goldman says.

Lockheed Martin shares jumped Wednesday after Goldman Sachs upgraded the stock to buy from neutral and added it to the firm's so-called conviction list of favorite calls.

The stock was up 2 percent in premarket trading Wednesday following Goldman's note to clients.

Lockheed "increasingly looks to have outgrowth differentiators in an end-market we favor (Defense)," Goldman said. "Margins can expand from current levels in every segment. Free cash can convert at a high rate for a long time. We see upside to FactSet consensus estimates, and the recent pullback in shares makes valuation more attractive."

Lockheed reported better-than-expected results on Tuesday, but the stock failed to respond, rising slightly. The stock is little changed on the year at $321.35.

Goldman also bumped up its 12-month price target to $394 a share from $391.

—With reporting by Michael Bloom