Defense Stocks Active As Barclays Downgrades Lockheed And Raytheon, Upgrades General Dynamics

Shares of defense companies were active Monday, after Barclays downgraded Lockheed Martin Corp. and Raytheon Co. and upgraded General Dynamics Corp. . Analysts said they are sticking with a neutral stance on the broader sector despite higher valuations, as macroeconomic uncertainty weighs against heightened terrorism fears. The bank downgraded Lockheed and Raytheon to equal weight from overweight. For Lockheed, "we think 2016/2017 numbers still need to come down ~8-10% as margins in LMT's new segments will likely feature a lower multi-year profile than investors are thinking, and although the looming services divestiture is the right strategic move it doesn't look value-creating," analysts wrote. Raytheon is a valuation move--the stock has reached Barclay's price target. The bank upgraded General Dynamics to overweight from equal weight, and said it offers the best risk-reward in the group. "It's clear that business jet-related fears have dragged down GD's valuation of late but Gulfstream is benefitting from BBD's liquidity struggles and delays at competitor Dassault," said the note. Lockheed shares fell 2.8%, Raytheon was down 1.8% and General Dynamics rose 1%.