On Monday, UBS adjusted its outlook on L3Harris Technologies (NYSE:LHX), a global aerospace and defense technology innovator, by increasing the stock's price target to $240 from the previous $233. The firm sustained its Neutral rating on the shares.
The adjustment follows L3Harris Technologies' announcement of their first-quarter results, which showed a revenue surpassing consensus expectations, albeit with a modestly slower organic growth compared to its industry peers, attributed to more challenging comparative figures.
The standout feature of the quarterly report was the multi-segment margin outperformance. L3Harris Technologies reported its second consecutive quarter of positive EACs (Estimates at Completion), which are crucial in assessing the company's financial health and project management efficiency. The company highlighted the accelerating savings being realized from its LHX NeXt plan, alongside the maturation of several development programs.
The reported segment EBIT (Earnings Before Interest and Taxes) margin of 15.1% exceeded the consensus estimates by 40 basis points. This figure is particularly significant as it serves as an indicator of the company's operational profitability.
UBS analysts suggest that there could be potential for the company's full-year margin guidance to be raised, considering the strong start to the year. However, they also note that there are various factors with uneven impacts, such as international and short-cycle business components, which have yet to unfold over the remainder of the year.
The positive EACs mentioned by the company are indicative of a favorable cost performance and efficiency in project execution, which could bode well for future financial outcomes. L3Harris Technologies' emphasis on the LHX NeXt plan and its development programs maturing are strategic elements that the company expects to drive further improvements and savings.
InvestingPro Insights
As L3Harris Technologies (NYSE:LHX) navigates through its first quarter with a positive outlook from UBS, recent data and insights from InvestingPro provide additional context for investors. With a market capitalization of $40.69 billion and a robust revenue growth of 15.66% over the last twelve months as of Q1 2024, L3Harris stands as a solid player in the aerospace and defense sector. The company's commitment to shareholder returns is underscored by its impressive record of raising dividends for 22 consecutive years, and analysts anticipate net income growth this year. These factors, combined with a dividend yield of 2.16%, paint a picture of a company that is not only growing but also rewarding its investors.
Furthermore, the stock's relative stability is reflected in its low price volatility, which could appeal to investors looking for steady performers in turbulent markets. As a prominent player in its industry, L3Harris Technologies has maintained dividend payments for 54 consecutive years, a testament to its financial resilience and strategic planning. For those seeking deeper analysis and more InvestingPro Tips, there are 12 additional insights available on the platform, including earnings revisions and profitability projections. To enhance your investment strategy with these expert insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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