Lockheed Martin can return to growth this year as the outlook for the defense sector strengthens, providing a “meaningful” opportunity for earnings to surprise to the upside, according to Credit Suisse. Analyst Scott Deuschle upgraded the arms company to outperform from underperform. Deuschle also raised his target price to $510 from $427, which implies shares could rise 11% from the stock’s closing price on Monday. “LMT has now reported three consecutive quarters with book-bill > 1.0x, with [trailing 12 months] book:bill accelerating to 1.08x in Q3 and hitting 1.22x in Q4. We view this acceleration as a powerful signal that the rationale for our prior rating no longer holds,” Deuschle wrote Monday in a note to clients. “Indeed, our experience with defense is that revenue nearly always accelerates off an acceleration in bookings, so we are increasingly optimistic that LMT can return to growth this year. This could offer [a] meaningful estimate upside opportunity,” added the analyst. Lockheed Martin gained 1.51% in premarket trading following the upgrade. Shares gained almost 20% in the past 12 months. Deuschle noted that potential headwinds this year include lower material receipts on the F-35, which is one of Lockheed Martin’s combat aircraft models. Lower volumes of its anti-missile system THAAD also could weigh on growth as could the possibility of reduced defense department budgets. Still, Credit Suisse anticipates a growth could be more bullish than what the company’s latest guidance suggests, given its backlog and the possibility of supply chain improvements. Deuschle said that based on past earnings data patterns, the company’s 11% backlog growth in 2022 foreshadows revenue growth in 2023. —CNBC’s Michael Bloom contributed to this report.