L3Harris Technologies: Defense Spending Cycle Underpins Re-Rating Potential
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Narek Hovhannisyan352 FollowersFollow5ShareSavePlay(17min)CommentsSummaryL3Harris Technologies (LHX) remains a Buy, with a new 12% upside target to $325 driven by robust Q3 results and upgraded forecasts. Geopolitical tensions and rising global defense budgets underpin strong order growth, a $36B backlog, and continued margin expansion across LHX’s segments. Operational improvements via the LHX NeXt program and disciplined capital allocation support sustained margin gains, deleveraging, and growing shareholder payouts. Valuation remains attractive despite premium multiples, as market expectations are justified by durable demand and improving free cash flow yields. JHVEPhoto/iStock Editorial via Getty Images Investment Thesis. I remain bullish on L3Harris Technologies (LHX) shares despite the fact that the shares reached the target price I set in less than six months. In early June, I predictedThis article was written byNarek Hovhannisyan352 FollowersFollowHi there! I’m Narek, and I’ve been in the investment world for over six years. I started out as an equity analyst at European banks, digging into reports and learning how to spot value in the markets. I’ve worked across sectors — from telecom to industry — and found that behind every financial statement is a real story. I studied in Belgium — did my bachelor’s in Antwerp, master’s at KU Leuven, and later completed an MBA in Finance at Vlerick. That journey gave me both theory and hands-on skills. Now I’m building my own investment project focused on the CIS region. I’m passionate about applying Western analytical tools to uncover hidden value in emerging markets. If you enjoy deep, fundamentals-driven research and digging beneath the surface of a company — glad to have you on board!Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsWhat drives the 12% upside target for LHX over the next year?Upgraded revenue and margin forecasts, a robust $36B order backlog, and continued demand from geopolitical tensions support a fair value estimate of $325 per share.How is LHX balancing growth, deleveraging, and shareholder returns?LHX is reducing net debt (Net Debt/EBITDA down to 2.93x), increasing dividends (23 years of growth), and accelerating buybacks, enabled by strong free cash flow generation.What are the primary risks to the LHX investment thesis?Key risks include potential reductions in defense spending, high competition for contracts, and execution risks on large projects that could pressure revenue or margins.Recommended For You