Goldman Sachs sees potential pressure on Lockheed Martin shares if the US tries to rein in spending. Analyst Noah Poponak said defense stocks are now priced into the global geopolitical struggle between the world’s largest nations, but could be hit as the U.S. refocuses on its cumulative debt. Defense stocks could suffer if the defense budget, valuations or earnings come off the highs they are currently nearing, he said. Lockheed Martin is down to sell from neutral, nothing that the company is very vulnerable to changes in the government budget with 75% exposure. He also lowered his price target by $56 to $332, which represents a 28% drop from where the stock closed Thursday. “The defense budget has grown to record levels, and with the cumulative U.S. government debt high, the focus on slowing spending growth or outright reductions could return in 2023,” Poponak said in a note to clients. “LMT is very diverse in the defense end market, meaning it often grows at the same rate as the budget.” Shares were down nearly 3% in pre-market trading. Beyond the government’s budget changes, Poponak expects financial losses due to the suspension of deliveries of F-35 jets due to the December incident that is still under investigation. He said the company should also experience uneven growth with other offerings such as the Blackhawk aircraft and Overhead Persistent Infrared, or OPIR, satellites. Inflation will also limit organic growth in the coming years, he said, leading to a mid-2020s recovery just where Lockheed Martin is doing in 2021. Poponak expects modest cash flow growth in the next few years. Goldman Sachs is relatively less optimistic about Lockheed Martin compared to peers, as the company expects an average of 3% for defense and space stocks and an average of 29% for aerospace stocks. But Poponak also downgraded Northrop Grumman to sell from neutral and Raytheon to neutral from buy. – CNBC’s Michael Bloom contributed to this report.