Lockheed Martin Stock Bolstered by Major Contract Amid F-35 Scrutiny

A substantial $10 billion contract expansion for Lockheed Martin's proven airlifter program is providing long-term stability for the defense giant, even as it faces pointed regulatory criticism over its flagship fighter jet. This contrast between a reliable revenue stream and operational challenges is defining the current investment thesis for the company.

Significant pressure emerged from Washington on December 19th, following a critical report from the Department of Defense's Inspector General. The audit focused on the F-35 sustainment program, revealing that approximately $1.7 billion in performance-based logistics fees were paid to Lockheed Martin despite the fleet failing to meet readiness targets. The report noted that mission-capable rates for the aircraft hovered around just 50% in 2024. Investors are now awaiting management's commentary on this finding in the upcoming January earnings release. Should the Pentagon move to recoup fees or enforce stricter penalties for missed performance metrics, the current positive market sentiment could face a stress test by early 2026.

C-130J Program Guarantees Production Through 2035

Offsetting this regulatory friction is the confirmed modification of a massive framework agreement for the C-130J Super Hercules program. Announced officially on December 23rd, the amendment increases the total contract value from $15 billion to $25 billion. This extension secures continuous production at the Marietta, Georgia facility through July 16, 2035.

Should investors sell immediately? Or is it worth buying Lockheed?

The revised terms are designed to streamline sales to a coalition of key allied nations, including Germany, Australia, and France. Furthermore, on the same day, Lockheed's subsidiary Derco secured a separate $209 million contract for logistics components. These agreements provide crucial revenue visibility and counter concerns about a potential downturn in production activity, effectively guaranteeing cash flow for over a decade.

Market Reaction Weighs Orders Over Criticism

The tangible growth of the order backlog is currently being weighted more heavily by the market than efficiency critiques. Lockheed Martin's share price has advanced roughly 7.7% over the past 30 trading days, climbing from the $450 range to approximately $486. The substantial C-130J contract is acting as a stabilizing force and a financial buffer against the more volatile negotiations and risks inherent in the combat jet segment. This demonstrates investor confidence in the durability of the company's diversified contract portfolio.