On Friday, Truist Securities increased its price target on L3Harris Technologies (NYSE:LHX) to $293 from the previous target of $250. The firm continues to recommend a Buy rating for the defense contractor's stock.
The adjustment comes with the anticipation of a strong demand both domestically and internationally, which is expected to allow the management of L3Harris Technologies to slightly raise its outlook for 2024. This outlook is bolstered by a forecasted book-to-bill (B2B) ratio above 1x in the third quarter of 2024.
The analyst predicts that while Integrated Mission Systems (IMS) and Aviation Reconnaissance (AR) margins may decline in the second half of the year compared to the first half due to product mix, there is still potential for upside at AR. This optimism is based on the progress of integration efforts and related savings outpacing initial plans.
Furthermore, the firm is keen on management's commentary regarding revenue growth expectations for 2025. They anticipate top-line growth to likely be in the range of 4-6%, coupled with strong free cash flow (FCF) conversion.
The price target increase reflects confidence in L3Harris Technologies' future performance, considering the company's strategic position and operational execution. The unchanged revenue and earnings per share (EPS) estimates suggest a stable financial outlook for the company as it navigates the current market environment.
In other recent news, L3Harris Technologies has announced several key developments. The company's Board of Directors has approved a quarterly cash dividend of $1.16 per common share. L3Harris has also introduced its new autonomous vehicle system, Diamondback (NASDAQ:FANG), designed for reconnaissance and security operations. This comes alongside an upgrade from Peerperform to Outperform by Wolfe Research, due to strong margin performance and potential for further expansion.
In addition, L3Harris has secured a potentially lucrative contract with the U.S. Navy, worth $587.4 million, for the provision of new tactical jamming pods over the next five years. Despite not securing the High Accuracy Detection and Exploitation System contract from the US Army, Jefferies has reiterated a Buy rating for L3Harris.
In terms of financial developments, L3Harris reported a 9% increase in non-GAAP earnings per share for the second quarter of 2024, along with a substantial backlog of $32 billion. However, Morgan Stanley (NYSE:MS) downgraded L3Harris's stock from Overweight to Equalweight, citing comparative industry analysis and recent financial developments.
InvestingPro Insights
The recent price target increase by Truist Securities aligns well with L3Harris Technologies' strong market position and financial performance. According to InvestingPro data, the company's revenue growth stands at 15.44% over the last twelve months, with a quarterly growth of 12.91% in Q2 2024. This robust growth supports Truist's optimistic outlook on the company's future performance.
InvestingPro Tips highlight that L3Harris has raised its dividend for 23 consecutive years and has maintained dividend payments for 54 consecutive years. This consistent dividend history underscores the company's financial stability and commitment to shareholder returns, which may be attractive to investors seeking reliable income streams in the defense sector.
Moreover, the company's PEG ratio of 0.81 suggests that it may be undervalued relative to its growth prospects, potentially supporting Truist's bullish stance. With a market capitalization of $47.1 billion and trading near its 52-week high, L3Harris appears to be in a strong position within the Aerospace & Defense industry.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for L3Harris Technologies, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.