Investing.com -- Lockheed Martin (NYSE:LMT) shares dipped more than 2% in premarket trading Monday after the defense contractor’s stock was hit with two analyst downgrades on Wall Street.

The revisions come after Lockheed lost out to Boeing (NYSE:BA) on the U.S. Air Force's Next Generation Air Dominance (NGAD) program. Both Bank of America (BofA) and Melius Research lowered their ratings on Lockheed stock, while the latter also upgraded Boeing shares.

Boeing stock climbed 2.6% in the premarket trade. 

BofA downgraded Lockheed to Neutral from Buy and cut its price objective to $485 from $685. The firm had placed “significantly higher odds on LMT winning the program” and now sees the stock as “largely range-bound,” noting a lack of near-term catalysts and lingering uncertainty around its Aeronautics business.

The loss of NGAD, along with Lockheed’s earlier exit from the Navy’s F/A-XX competition, means the company is not currently leading development of any manned sixth-generation aircraft.

Separately, Melius Research lowered Lockheed to Hold from Buy, citing “competitive losses and growing concerns over Europe’s efforts to reduce reliance on U.S. defense contractors, which may limit Lockheed’s export opportunities.”

The investment firm also cut its sales growth forecasts and the price target to $483 from $603.

Melius pointed out that “Lockheed is not expected to lose fixed-wing aircraft competitions” thanks to the company’s long track record through its Skunk Works division.

However, with the contractor also missing out on the first phase of the Air Force’s Collaborative Combat Aircraft (CCA) program, the firm’s analysts questioned whether the company will ever again be a prime contractor on a new manned fighter.

At the same time, Melius upgraded Boeing to Buy, highlighting its NGAD victory and improved operational momentum under CEO Kelly Ortberg.

The win is expected to provide Boeing with $20 billion in profitable cost-plus defense sales over the next five years, with production contracts potentially generating $60 billion more over multiple decades.

“We think the NGAD win will boost employee morale and aid Boeing Defense (BDS) in retaining top engineering talent,” Melius analysts said.

Furthermore, the analysts highlighted that Boeing’s post-strike ramp-up of 737 production is outperforming expectations. The company is projected to deliver 105 aircraft in the first quarter of 2025, well above the consensus estimate of 83.

They also anticipate strong order activity at June’s Paris Air Show, which could boost cash flow, and see a further potential catalyst later this year if Boeing prevails over Northrop (NYSE:NOC) in the Navy’s sixth-generation fighter competition (F/A-XX).

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