L3 Harris (LHX) has many positive attributes, including its alignment with the White House’s goals and a number of bullish notes by prominent banks in the last six months. Additionally, its earnings per share climbed significantly last quarter versus the same period a year earlier.
On the other hand, the firm’s revenue, excluding acquisitions, was flat in Q1, while its earnings per share are expected to drop in 2025. Finally, its valuation is not especially low at this time.
In light of all of these points, I advise investors who are interested in large defense names to keep an eye on LHX and consider buying it if the shares drop or if the firm’s revenue growth accelerates.
Alignment With the White HOuse’s Goals
On the company’s Q1 earnings call, held on April 23, CEO Chris Kubasik reported that LHX is “well positioned to support “ the administration’s Golden Dome project. The latter initiative involves defending all of America’s land “from ballistic, hypersonic, and cruise missile threats.”
According to Kubasik, L3 has “world class capabilities in missile warning, tracking, and discrimination,” while it markets “propulsion and attitude control for all interceptors, both in production and development.” L3 also his involved in providing components of offensive missile systems.
Additionally and impressively, the firm’s “hypersonic and ballistic tracking space sensor satellite… is the only proven on orbit system capable of tracking Iran’s new hypersonic missiles,” the CEO reported.
And L3 is also a significant player in other areas of space, leaving it well-positioned to benefit significantly from the administration’s efforts in that area.
Specifically, Kubasik noted that the firm had “made substantial investments in (two) new space factories,” while it was the only company “to secure awards across all three tranches of the Space Force’s tracking layer.”
Multiple Large Banks Have Been Bullish on LHX Stock
In April, Morgan Stanley identified LHX as one of three stocks that could be relatively immune to tariffs, while Bank of America in October upgraded the shares to Buy from Neutral with a $300 price target. According to the latter bank, the company’s recent initiatives have left it well-positioned to generate strong growth going forward.
Particularly impressive, according to the bank, was the company’s alliance with Palantir. The partnership should enable LHX to perform well in the current tech-oriented defense sector. Bank of America wrote.
The bank was also upbeat on the company due to its high exposure to munitions and propulsion technologies, as the demand for those products was high.
On April 10, Citi placed a Buy rating on LHX, while Goldman Sachs upgraded the shares two notches to Buy from Sell on April 11.
Mixed Numbers to Consider
In Q1, the company’s revenue, excluding acquisitions and divestitures, was flat, compared with the same year earlier. Further, the stock’s forward price-to-earnings ratio of 20.9 times is a bit high, and analysts, on average, expect its earnings per share to drop to $10.48 this year from $13.10 in 2024.
But on the positive side, L3’s EPS, excluding certain items, did rise 7% last quarter versus the same period a year earlier to $2.41.
Additionally, analysts’ mean estimate calls for its EPS to climb to $12.10 in 2026.
*This article is intended to be informational only; it is not financial advice.
