Lockheed Martin collapses on the stock market. A look at Leonardo shares

Lockheed Martin (LMT) shares fell 4.16% following the release of its quarterly earnings data, which significantly downgraded its outlook for 2024, potentially impacting other defense stocks as well.
A detailed analysis turns to the shares of Leonardo (LDO), which, after a noteworthy rise, are starting to show the first signs of weakening as the month of February approaches.
Have we reached a turning point for defense stocks, or is this simply a temporary correction? Lockheed Martin (LMT) shares and the defense sector: what's next for 2024? Fourth quarter 2023 earnings for Lockheed Martin companies were pleasing.
The group exceeded consensus expectations with an EPS (Earnings Per Share) of $7.58, against an estimate of $7.28, achieving revenues of $18.9 billion.
Although sales were down, they still beat analysts' estimates.
In fact, in the fourth quarter of last year, it exceeded forecasts which were set at $17.96 billion.
However, what worried the market and triggered the decline in share prices in Tuesday's stock market session was the outlook for 2024 not in line with the prospects defined by the company's performance.
The group's guidance, despite predicting a turnover of between $68.5 billion and $70 billion, has not thrilled the market.
The company expects earnings per share of $25.65 to $26.35, lower than FactSet estimates.
CEO Jim Taiclet showed no concerns in his statements, but spoke with a strong bias towards supporting global security for the US government and its allies.
It is worth highlighting that, although the company did not show serious signs of weakness, the market did not react in the best way.
This has generated a generalized contraction in the defense sector, a sector which nevertheless continues to show signs of strength, with an increase in orders caused by the exacerbation of conflicts and geopolitical tensions.
Leonardo shares (LDO): should we worry? This provides an interesting starting point to also investigate the performance of other players in the defense sector, such as the Piazza Affari company Leonardo (LDO), at the center of the attention of many analysts and investors following the strong appreciation of its shares in recent years.
months of trading.
LDO shares, after reaching a price of $17 following a rise of about 15% at the beginning of the year, have begun a correction, falling about 8% from the highs.
This movement is in line with the general trend of the sector, although there is no fundamental evidence to justify this contraction.
Many believe that this is a profit taking, given the opening of the earnings season in the USA and the strong increase in the share price.