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On Monday, Jefferies analyst Sheila Kahyaoglu adjusted the price target for L3Harris Technologies (NYSE:LHX) stock, lowering it to $250 from the previous $260, while continuing to endorse the stock with a Buy rating. The revision follows the company’s recent divestiture of its Commercial Aviation Solutions (CAS) segment. According to InvestingPro data, L3Harris currently trades at a P/E ratio of 26.36x and shows signs of being undervalued based on its comprehensive Fair Value analysis.
L3Harris Technologies completed the sale of CAS on March 31, after the close of the first quarter, to The Jordan Company (TJC) for a sum of $800 million. The sale of this division, which was projected to generate approximately $600 million in sales in 2024 and was on a growth trajectory, is expected to create a revenue shortfall of around $480 million for L3Harris in 2025. This represents a 2% impact on the company’s revenue forecast for the rest of the year. The company maintains strong financial health with a "Fair" overall score on InvestingPro’s comprehensive assessment framework, which evaluates multiple financial dimensions including growth, profitability, and cash flow metrics.
As a result of the CAS divestiture, Jefferies now estimates L3Harris Technologies’ revenue for 2025 to be $21.6 billion, marking a 4% organic growth excluding CAS. This figure is slightly lower than the company’s guidance, which ranged from $21.8 billion to $22.2 billion, including CAS.
The proceeds from the sale are anticipated to be channeled towards accelerating share repurchase initiatives, with a target of $1 billion in buybacks for 2025. Additionally, the transaction has influenced the company’s leverage, now standing at 2.9 times as of the fourth quarter of 2024, which aligns with L3Harris’ target of maintaining leverage below 3 times.
The finalized sale and subsequent financial adjustments reflect L3Harris Technologies’ strategic decisions and their impact on the company’s financial outlook as projected by Jefferies. The firm’s maintained Buy rating indicates a continued positive outlook on the stock despite the reduced price target.
In other recent news, L3Harris Technologies reported its quarterly financial results, revealing a revenue of $5.5 billion, which aligned with market expectations. The company’s adjusted earnings per share (EPS) were $3.47, surpassing the consensus estimate of $3.42. In addition, L3Harris announced a dividend increase from $1.16 to $1.20 per share, marking the 24th consecutive annual dividend hike. Citi analysts adjusted their price target for L3Harris to $285, down from $291, but maintained a Buy rating, reflecting continued confidence in the company’s performance.
In other developments, L3Harris successfully tested an advanced solid rocket motor, the eSR-19, in a Missile Defense Agency exercise. This upgraded motor is seen as enhancing the company’s air-launch system capabilities. The company also expressed optimism in achieving its 2026 financial targets, including $23 billion in revenue and a 16% operating margin. Furthermore, L3Harris’s cost management efforts have resulted in savings exceeding initial projections by approximately $200 million. These recent developments highlight L3Harris Technologies’ ongoing strategic efforts and financial stability.
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