L3Harris maintains stock target, buy rating despite Army contract miss

On Friday, L3Harris Technologies (NYSE:LHX) received a reiterated Buy rating from Jefferies, with a stock price target of $275.00. The affirmation comes despite the company, in partnership with Leidos and MAG Aerospace, not securing the High Accuracy Detection and Exploitation System (HADES) contract from the US Army. The 12-year contract, valued at $1 billion, was awarded to Sierra Nevada Corporation (SNC).

HADES is a significant component of the US Army's aerial Intelligence, Surveillance, and Reconnaissance (ISR) transformation strategy. The program aims to deploy a fleet of 14 aircraft, with initial funding set at $93.5 million. This decision by the Army follows previous awards to SNC for two ISR-as-a-service platforms for the ATHENA-S system in October 2023, and to the LHX and MAG Aerospace team for two ISR platforms for ATHENA-R in March 2023.

Despite not winning the HADES program, L3Harris Technologies remains in a strong position with ongoing projects. The ATHENA-R contract from March 2023 and other defense-related endeavors continue to contribute to the company's portfolio.

The reiterated Buy rating and stock price target reflect confidence in L3Harris Technologies' overall business prospects and its role in the defense sector. The company's stock continues to be monitored by investors and analysts for its performance and future contract opportunities.

In other recent news, L3Harris Technologies has seen significant developments. Morgan Stanley downgraded the company's stock from Overweight to Equalweight, citing comparative industry analysis and recent financial developments. Despite this, the firm acknowledged that L3Harris's stock remains attractively priced in comparison to other companies in the sector.

Moreover, L3Harris's CEO Christopher E. Kubasik has established a trading plan for exercising stock options and selling the corresponding shares, a common practice among executives to manage their stock holdings in a structured and compliant manner.

JPMorgan made a bullish move, increasing its price target for L3Harris Technologies to $276, based on the company's solid quarterly performance and promising financial metrics.

The company also celebrated the first anniversary of its acquisition of Aerojet Rocketdyne, announcing substantial performance improvements and increased investment in the subsidiary.

Finally, L3Harris Technologies has reported strong financial results for the second quarter of 2024, including a 9% increase in non-GAAP earnings per share, and a significant backlog of $32 billion. These are recent developments that investors should be aware of.

InvestingPro Insights

As L3Harris Technologies (NYSE:LHX) navigates the competitive landscape of defense contracting, recent InvestingPro data and tips provide a deeper look into the company's financial health and market position.

With a robust market capitalization of $44.03 billion, L3Harris stands as a significant player in the Aerospace & Defense industry. Its revenue growth over the last twelve months, as of Q2 2024, is a notable 15.44%, showcasing the company's ability to expand its earnings capacity in a challenging environment.

InvestingPro Tips highlight that L3Harris has a track record of raising its dividend for an impressive 22 consecutive years, indicating a commitment to shareholder returns. Moreover, with 14 analysts having revised their earnings upwards for the upcoming period, there is a positive sentiment surrounding the company's near-term financial prospects. These insights are particularly relevant for investors considering the company's potential for sustained profitability and growth.

The company's P/E ratio stands at 36.87, with an adjusted P/E ratio for the last twelve months as of Q2 2024 at 25.71, suggesting that the stock could be trading at a reasonable valuation relative to its near-term earnings growth. To further explore L3Harris Technologies' financial outlook, including additional InvestingPro Tips, interested parties can visit the dedicated page at https://www.investing.com/pro/LHX.

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