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On Monday, Goldman Sachs analyst Noah Poponak upgraded L3Harris Technologies, traded on the New York Stock Exchange under the ticker (NYSE:LHX), from Sell to Buy, significantly increasing the price target to $263 from the previous $198. Currently trading at $218.58 with a market capitalization of $41 billion, the company's upgrade reflects a positive outlook on its positioning in a potential environment of increased defense spending. According to InvestingPro data, L3Harris is a prominent player in the Aerospace & Defense industry.
L3Harris Technologies is recognized for its involvement in areas of the defense budget that are experiencing faster growth and does not rely heavily on any single major platform program that could be at risk of spending cuts or margin challenges. This diverse exposure is a key factor in the company's favorable position. The company's financial health appears solid, with InvestingPro analysis showing a gross profit margin of 25.9% and revenue growth of 9.8% over the last twelve months.
The analyst noted L3Harris's recent performance, which has exhibited stronger company-wide margin results compared to its industry peers. This financial health has been a contributing factor to the upgraded rating.
Additionally, the valuation of L3Harris Technologies is currently lower than the average of other large-cap prime contractors. This discount in valuation, coupled with the company's solid margin performance, presents an attractive opportunity for investors, according to Goldman Sachs' assessment.
The new price target of $263 indicates a substantial increase in confidence from Goldman Sachs in the future financial prospects of L3Harris Technologies. The upgrade to a Buy rating from the previous Sell status suggests a significant shift in the firm's expectations for the company's stock performance.
In other recent news, L3Harris Technologies completed the sale of its Commercial Aviation Solutions segment to The Jordan Company for $800 million. This divestiture is expected to create a revenue shortfall of approximately $480 million for L3Harris in 2025, impacting the company's revenue forecast by 2%. Jefferies has adjusted its revenue estimates for L3Harris to $21.6 billion for 2025, reflecting a 4% organic growth excluding the sold segment. Despite this adjustment, Jefferies maintains a Buy rating for the stock, although the price target has been lowered to $250. Additionally, L3Harris announced a dividend increase from $1.16 to $1.20 per share, marking the 24th consecutive annual increase, as part of its strategy to enhance shareholder returns. In other developments, L3Harris successfully tested an upgraded solid rocket motor, the eSR-19, in a missile defense exercise, showcasing its enhanced capabilities. This marks the company's 39th launch in support of the U.S. missile defense program. Meanwhile, Stephen Feinberg has been confirmed as the Deputy Secretary of Defense, emphasizing the need for improved financial accountability and efficiency within the Department of Defense.
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