Truist Securities cuts L3Harris stock to $274 from $283, keeps Buy rating

On Friday, Truist Securities adjusted its price target for L3Harris Technologies (NYSE:LHX), reducing it to $274 from the previous target of $283, while maintaining a Buy rating on the company’s shares. The adjustment followed the release of L3Harris’ fourth-quarter 2024 results, which surpassed both Truist Securities’ and Wall Street’s expectations. Despite this, the firm’s 2025 guidance fell short in terms of earnings per share (EPS) and free cash flow (FCF). According to InvestingPro analysis, the stock appears undervalued at its current price of $209.57, trading near its 52-week low of $200.18.

The analysts at Truist Securities highlighted that L3Harris management reaffirmed its 2026 targets and slightly raised its operating margin target. However, they pointed out that the company’s growth acceleration needed to achieve $23 billion in revenue by 2026 will require close monitoring. This is because organic revenue growth will need to nearly double the rate projected for 2025. InvestingPro data shows current revenue at $21.32 billion with a 9.82% growth rate, while maintaining healthy margins with a gross profit margin of 25.9%.

L3Harris’ management has introduced a new adjusted EPS metric, which according to Truist Securities, may introduce some confusion. Nevertheless, the company’s NeXt program is on track to unlock considerable savings. Management now anticipates $1.2 billion in savings, with these efforts aligning well with the Department of Defense’s own efficiency goals (DOGE). InvestingPro highlights two notable achievements: the company has maintained dividend payments for 54 consecutive years and raised dividends for 23 straight years, with subscribers having access to 6 more exclusive ProTips.

Lastly, the analysts noted that there is potential for further expansion of margins in the Aerospace and Defense (AR) sector by 2026. Despite the lowered price target, Truist Securities’ continued endorsement of a Buy rating indicates their positive outlook on L3Harris Technologies’ stock performance potential. For deeper insights into L3Harris’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, L3Harris Technologies reported a robust fourth quarter with earnings that exceeded analyst estimates, bolstered by strong demand and operational efficiencies. The company posted an adjusted earnings per share of $3.47, surpassing the analyst consensus of $3.44. Revenue for the quarter was $5.5 billion, in line with expectations and marking a 3% year-over-year increase.

For the full year 2024, the company reported revenue of $21.3 billion, a 10% increase from the previous year. L3Harris also reported a strong order intake of $24.2 billion for 2024, resulting in a record backlog of $34 billion.

Looking ahead, the company provided an upbeat outlook for fiscal year 2025, projecting earnings per share between $10.55 and $10.85 and revenue in the range of $21.8 billion to $22.2 billion. This guidance slightly exceeds the analyst consensus of $21.9 billion in revenue.

In addition, L3Harris highlighted its successful cost-saving initiatives through its LHX NeXt program, having achieved $800 million in savings in 2024 and raising its overall cost-savings goal to $1.2 billion by the end of 2025. These are the recent developments at L3Harris Technologies.

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