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On Monday, Truist Securities updated its outlook on L3Harris Technologies (NYSE:LHX) shares, increasing the price target to $300 from the previous $293. The firm maintained a "Buy" rating on the stock. This adjustment comes in the wake of the company's third-quarter results for the year 2024, which exhibited strong performance highlighted by record bookings.
The revised stock price target reflects an optimistic view following the company's tightened revenue and adjusted earnings per share (EPS) guidance, which has been influenced by an improved adjusted operating margin forecast.
The firm's analysis pointed to L3Harris Technologies' efficient cost management and the NeXt savings program, which is reportedly surpassing expectations. Management's indication of potential upside to the 2026 margin target, which is projected to be 16%, was a key factor in the revised price target. The analyst believes that this target margin is likely to be approached as early as 2025 due to the firm's strategic initiatives.
L3Harris Technologies' focus on cost optimization, increased sales of higher-margin software, and volumes of radio products are seen as driving forces behind the anticipated margin improvements. Moreover, the acceleration in solid rocket motor sales is expected to contribute to the company's financial success.
The firm's confidence in the company's future performance is further supported by the projection of organic revenue growth accelerating in 2025 and 2026. In response to these factors, Truist Securities has revised its estimates for L3Harris Technologies upwards, signaling a strong outlook for the defense contractor's financial trajectory.
In other recent news, L3Harris Technologies reported strong third-quarter results for the fiscal year 2024, with an 8% year-over-year revenue increase and robust free cash flow exceeding $700 million.
The firm raised its full-year revenue guidance to between $21.1 billion and $21.3 billion and expects earnings per share (EPS) to range from $12.95 to $13.15. RBC Capital Markets has subsequently increased its price target for L3Harris Technologies to $265 from $240, maintaining its Sector Perform rating.
The company also secured major contracts, including a $600 million Next Generation Jammer contract and a $1.2 billion IDIQ contract with the U.S. Navy. In addition, a strategic partnership with Palantir (NYSE:PLTR) was announced, aimed at enhancing supply chain management and digital infrastructure.
These recent developments follow a favorable financial performance attributed to effective execution in capitalizing on cost-saving opportunities, with L3Harris Technologies now expecting to exceed its 2024 cost savings target of $400 million, aiming for at least $600 million.
The company projects to achieve margins exceeding 16% by the year 2026. Despite operational challenges, L3Harris Technologies remains committed to meeting mission-critical needs in a complex global threat environment.
InvestingPro Insights
L3Harris Technologies' recent performance and positive outlook are further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $47.95 billion, reflecting its significant presence in the Aerospace & Defense industry. L3Harris has demonstrated strong financial performance with a revenue of $21.14 billion over the last twelve months as of Q3 2024, showing a robust revenue growth of 13.32% during this period.
InvestingPro Tips highlight L3Harris' commitment to shareholder value, having raised its dividend for 23 consecutive years and maintaining dividend payments for 54 consecutive years. This consistent dividend policy aligns with the company's solid financial position and may appeal to income-focused investors. Moreover, the stock has shown a high return over the last year, with a one-year price total return of 51.14%, and is currently trading near its 52-week high at 97.65% of that level.
These insights complement Truist Securities' optimistic view on L3Harris Technologies. The company's strong bookings, efficient cost management, and potential for margin improvement, as noted in the article, are reflected in InvestingPro's data on revenue growth and profitability. Investors seeking more comprehensive analysis can access additional tips and metrics through InvestingPro, which offers 11 more tips for L3Harris Technologies.
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