Lockheed Martin's (LMT) F-35 fighter jet faces greater headline risks for global sales and increased US budget pressure, RBC Capital Markets said in a Wednesday note.

"We continue to view the F-35 as well supported by the US Congress, but we see significantly greater risk now to US F-35 procurement funding," RBC analysts said.

Additionally, they said the recent loss to Boeing (BA) of a US Air Force contract to build a next-generation fighter jet raises fresh questions on the long-term growth outlook.

"Near-term catalysts are limited," the analysts said. "We can appreciate the current valuation screens attractive, but we believe these factors will remain an overhang on sentiment."

RBC downgraded the stock to sector perform from outperform and cut its price target to $480 from $550.

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