Mixed Performance for L3Harris Technologies Amid Industry Challenges
L3Harris Technologies, Inc. (LHX), a leader in the aerospace and defense sector, has a market capitalization of $46.5 billion. Based in Florida, the company specializes in advanced communications, electronic systems, and space and airborne solutions, providing essential technologies and innovative services to both government and commercial clients globally.
Stock Performance: A Year of Underachievement
Over the last year, LHX shares have lagged behind the broader market. The stock increased by 30.6% during this period, while the S&P 500 Index ($SPX) rose almost 31.8%. For 2024, LHX has advanced 16.5%, compared to a 25.8% increase for the S&P 500.
ETF Comparison Shows Stronger Gains
Focusing specifically on defense stocks, LHX has also trailed behind the SPDR S&P Aerospace & Defense ETF (XAR), which has gained approximately 37.5% in the past year. Year-to-date, XAR’s 28.3% growth has outpaced LHX’s returns.
Recent Declines Linked to Defense Sentiment
On November 25, LHX shares dropped by more than 3% following news of a potential cease-fire between Israel and Hezbollah, which negatively impacted defense stocks across the board. This decline followed a 5% dip on November 14, when news of a government spending cut initiative, led by Elon Musk and Vivek Ramaswamy, raised concerns for companies reliant on government contracts.
Analysts Expect Earnings Growth
Analysts are forecasting a 5.9% increase in LHX’s earnings per share (EPS) for the current fiscal year, ending in December, projecting a rise to $13.09 on a diluted basis. The company has consistently exceeded earnings expectations, achieving a positive surprise in all four quarters of the previous year.
Analyst Ratings Reflect Moderate Optimism
Among the 20 analysts who cover LHX, the overall rating is classified as a “Moderate Buy.” This includes 13 “Strong Buy” ratings, one “Moderate Buy,” five “Holds,” and one “Strong Sell.” This positive outlook has strengthened over the past month, with an increase from 11 analysts recommending a “Strong Buy.”
Upgraded Price Target Shows Potential for Growth
On November 26, Argus analyst Kristina Ruggeri raised L3Harris Technologies’ rating to “Buy” with a price target of $300, emphasizing a positive outlook supported by geopolitical factors. The firm cites the company’s record backlog, substantial government contracts, and improved cost efficiency as key growth factors.
The average price target for LHX stands at $277.45, indicating a 9% premium over current price levels. Notably, the highest price target reaches $324, revealing a potential upside of 39.7% for investors.
On the date of publication, Kritika Sarmah did not hold any direct or indirect positions in the securities mentioned in this article. All information and data provided are for informational purposes only. Please refer to the Barchart Disclosure Policy for more details.
The views and opinions expressed herein belong to the author and may not necessarily reflect those of Nasdaq, Inc.
