On Wednesday, Jefferies maintained a Buy rating on L3Harris Technologies (NYSE:LHX) and increased the stock's price target from $275.00 to $295.00. The firm's analysis highlighted L3Harris' third-quarter performance, which revealed an acceleration in organic growth to 5%, a significant improvement over the second quarter's 1% organic growth rate.
The report noted that the company's momentum appears sustainable, underpinned by a robust book-to-bill ratio of 1.4X for the quarter. Looking forward, the analyst anticipates mid-single-digit growth in the coming years. This optimistic projection is also supported by a rare increase in defense margins, which are expected to rise by 70 basis points in 2024.
Furthermore, L3Harris Technologies is on track to achieve substantial free cash flow (FCF) growth. The firm's forecasts suggest that FCF per share will grow from $10.50 to more than $15 by 2026, representing a compound annual growth rate (CAGR) of 14%. This growth is anticipated despite the stock currently trading at a discounted yield.
The report concluded with a positive outlook on L3Harris Technologies' financial trajectory, emphasizing the company's potential for sustained growth and profitability in the years ahead. The upgraded price target reflects the firm's confidence in the company's performance and market position.
In other recent news, L3Harris Technologies has seen a significant surge in rocket motor production due to high global demand. The company's subsidiary, Aerojet Rocketdyne, has doubled its monthly production rate for GMLRS rockets, largely used by the U.S. military. This increase in production comes after L3Harris acquire Aerojet in December 2022.
In the financial sector, Truist Securities has increased its price target for L3Harris from $293 to $300, maintaining a "Buy" rating. This adjustment follows the company's strong third-quarter results for 2024, which highlighted record bookings. L3Harris has also 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 also adjusted its price target for L3Harris, increasing it to $265 from the previous $240, while sustaining a Sector Perform rating.
In the company's recent earnings call, L3Harris reported a strong third quarter in 2024, with record order volume and significant contract wins. The company secured major contracts, including a $600 million Next Generation Jammer contract and a $1.2 billion IDIQ contract with the U.S. Navy. L3Harris is on track to exceed its 2024 cost savings target and remains focused on enhancing operational efficiency.
InvestingPro Insights
L3Harris Technologies' strong performance highlighted by Jefferies aligns with several key metrics and insights from InvestingPro. The company's market cap stands at $46.48 billion, reflecting its significant presence in the Aerospace & Defense industry. InvestingPro data shows that L3Harris has maintained impressive revenue growth, with a 13.32% increase over the last twelve months as of Q3 2024, and a 7.67% quarterly growth in Q3 2024. This supports Jefferies' observation of accelerating organic growth.
InvestingPro Tips reveal that L3Harris has raised its dividend for 23 consecutive years, demonstrating a commitment to shareholder returns that aligns with the company's strong financial performance. Additionally, the company's net income is expected to grow this year, which corroborates Jefferies' positive outlook on L3Harris' future profitability and cash flow generation.
The stock's 43.63% total return over the past year and its current price at 94.66% of its 52-week high suggest strong market confidence, mirroring Jefferies' bullish stance. For investors seeking more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into L3Harris Technologies' investment potential.
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