Lockheed downgraded at RBC after decade-high valuation

• Lockheed Martin (LMT -1.2%) is downgraded to Sector Perform from Outperform with a $244 price target at RBC Capital, noting that the stock's valuation has reached a 10-year high.
• The firm attributes the stock's elevated valuation to the F-35 finally reflecting an improved outlook, citing a material pickup in deliveries; the program is expanding to 30% from 20% of LMT's sales by 2018.
• RBC sees reduced cash deployment options ahead, explaining that $1.5B in cash contributions to LMT's pension is due in 2018 and 60% of the company's estimated 2016 EPS is represented by its dividend.
• RBC also downgraded Northrop Grumman (NOC -1.5%) on valuation concerns.
• Now read Large growth opportunities for Lockheed Martin