L3Harris Technologies
LHX
$236.60
-0.76%
L3Harris Technologies is a defense prime and mission-solutions provider whose portfolio spans software-defined radios, uncrewed aerial vehicles, electro-optical and infrared sensors, avionics, space-based systems, missiles, and solid rocket motors, alongside military aircraft refurbishment, training services, and maintenance of the FAA's communications infrastructure. The company sits in the top tier of the Aerospace & Defense industry — a scaled prime with roughly 45,000 employees and a diversified franchise built through a decade of acquisitions — but it is distinct from pure platform primes like Lockheed Martin in that its identity leans toward electronics, sensors, and 'missionization' content rather than airframe assembly. The current investor narrative is dominated by a striking divergence: geopolitical escalation with Iran and the Pentagon's SHIELD procurement push have highlighted defense supply gaps and record backlogs that should benefit L3Harris, yet the stock has been one of the sector's worst performers, with the market instead fixating on execution risk, margin recovery, and a first-quarter cash-flow miss. Bulls argue the company is a leveraged beneficiary of 'exquisite class' weaponry production ramp-ups and missile-defense programs like Golden Dome; bears counter that the earnings base is thin, the balance sheet is levered, and the equity has lost its relative-strength premium versus both peers and the S&P 500.…
LHX
L3Harris Technologies
$236.60
Related headlines
Investment Opinion: Should I buy LHX Today?
The synthesized recommendation is Hold. The core thesis is that L3Harris is a fundamentally sound defense prime with accelerating revenue growth (11.93% YoY) and a deeply discounted forward PE of 17.56x, but the market is demanding proof of margin recovery and cash-flow generation before re-rating the stock. The analyst consensus is 'buy' with a mean rating of 1.79 and an average target of $338.50, implying 42.4% upside, yet the stock sits just 0.9% above its 52-week low — a disconnect that suggests either a significant opportunity or stale estimates.
Supporting evidence for a constructive view includes: revenue growth of 11.93% YoY in Q1 2026, the fastest in five quarters; a forward PE of 17.56x versus a trailing PE of 35.53x, implying a 51% earnings recovery; TTM free cash flow of $2.589 billion; and a dividend yield of 1.58% covered by a 56.2% payout ratio. However, profitability is below peers — net margin of 7.35% and operating margin of 9.83% versus mid-teens for best-in-class primes — and Q1 2026 free cash flow was negative at -$194 million. The PEG ratio of 4.26 and EV/EBITDA of 17.92x suggest the stock is not cheap on all metrics.
The biggest risks that could invalidate the thesis are: (1) a continued failure to generate positive free cash flow, with Q1 2026's -$194 million serving as a warning; (2) margin compression, as seen in Q4 2025's 6.66% operating margin; and (3) a breakdown below the 52-week low of $236.79, which would likely trigger momentum selling. The rating would upgrade to Buy if free cash flow turns sustainably positive and operating margins hold above 11%, or downgrade to Sell if revenue growth decelerates below 8% or the stock breaks below $236.79 on high volume. Relative to its own history, the stock is near the middle-to-lower end of its valuation band, but the discount to peers appears justified by inferior profitability. The stock is fairly valued to slightly undervalued, but lacks a near-term catalyst.
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LHX 12-Month Price Forecast
L3Harris presents a classic value-versus-trap debate. The revenue trajectory is strong, with 11.93% YoY growth in Q1 2026, and the forward PE of 17.56x is undemanding if the $20.23 consensus EPS is achieved. However, the market is clearly skeptical, as evidenced by the -52.35% six-month relative-strength gap versus SPY and the stock's position just 0.9% above its 52-week low. The key tension is whether management can convert top-line growth into durable free cash flow and margin expansion — Q1 2026's negative free cash flow of -$194 million and Q4 2025's 6.66% operating margin are red flags. I would upgrade to bullish if Q2 2026 shows positive free cash flow and operating margin above 11%, and downgrade to bearish if the stock breaks below $236.79 or if revenue growth decelerates below 8%. The risk/reward is balanced, with 42.4% upside to the average target and 15–25% downside to the bear case.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on L3Harris Technologies's 12-month outlook, with a consensus price target around $335.33 and implied upside of +41.7% versus the current price.
Average Target
$335.33
0 analysts
Implied Upside
+41.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$264 - $405
Analyst target range
Coverage is solid with 14 analysts, and the consensus is bullish: the recommendation is 'buy' with a mean rating of 1.79 (where 1.0 is a strong buy and 5.0 a strong sell), and the average target price of $338.50 implies 42.4% upside from the current $237.69 — a strikingly wide gap that reflects how far the stock has fallen below where the sell-side believes it should trade. The distribution skews positive, with recent actions including Bernstein maintaining Outperform (May 2026), Citigroup and JP Morgan reiterating Buy/Overweight (February 2026), and Morgan Stanley upgrading to Overweight from Equal Weight (December 2025), while UBS and RBC remain Neutral/Sector Perform. The consensus is therefore bullish, but the persistence of Neutral ratings from UBS and RBC — and the fact that targets have not been cut to reflect the price collapse — suggests the sell-side is either early or anchored to stale estimates.
The target range runs from a low of $269.00 to a high of $405.00, a spread of $136, or roughly 50% of the average target, which signals meaningful disagreement about the company's trajectory. The high target of $405 implies multiple expansion back toward the 52-week high of $379.23 and assumes successful margin recovery, defense-budget tailwinds from Iran tensions and the SHIELD/Golden Dome programs, and a normalization of cash flow; the low target of $269 still implies 13.2% upside from the current price, meaning even the most bearish analyst sees the stock as undervalued — a rare configuration that usually precedes either a sharp re-rating or a wave of target cuts. The key risk is that the low target is not low enough: with the stock at $237.69 and consensus EPS estimates of $20.23, the market is effectively applying a ~11.7x multiple to forward earnings, well below the 17.56x forward PE implied by the current price, indicating that investors are discounting the consensus estimates themselves. Until the company demonstrates durable free-cash-flow generation and margin expansion, the wide target spread is likely to persist, and the stock's low beta (0.506) offers little protection if the fundamental narrative continues to deteriorate.
Bulls vs Bears: LHX Investment Factors
The bear case currently has stronger evidence, primarily because the stock is pinned to its 52-week low with a -52.35% six-month relative-strength gap versus SPY, and Q1 2026 free cash flow turned negative at -$194 million. Bulls point to 11.93% revenue growth, a 17.56x forward PE, and a 42.4% upside to the average analyst target of $338.50, but the market is clearly discounting those estimates. The single most important tension is whether the forward EPS estimate of $20.23 is achievable — if it is, the stock is deeply undervalued; if it is not, the low target of $269 may still be too high. Until L3Harris demonstrates durable free-cash-flow generation and margin expansion, the burden of proof remains on the bulls.
Bullish
- Revenue growth accelerating: Q1 2026 revenue of $5.744 billion rose 11.93% year-over-year, the fastest pace in at least five quarters, up from $5.132 billion in Q1 2025. The multi-quarter trend shows steady acceleration from $5.426 billion in Q2 2025 to $5.659 billion in Q3 and $5.648 billion in Q4, before the Q1 2026 step-up.
- Analyst targets imply huge upside: The average analyst target price of $338.50 implies 42.4% upside from the current $237.69, and even the lowest target of $269.00 implies 13.2% upside. With 14 analysts and a consensus recommendation of 'buy' (mean rating 1.79), the sell-side is overwhelmingly constructive.
- Forward PE at deep discount: The forward PE of 17.56x is roughly half the trailing PE of 35.53x, implying the market expects a dramatic earnings recovery. This forward multiple sits at a modest discount to the 18–22x range typical for large-cap defense primes, despite L3Harris's diversified franchise.
- Geopolitical and budget tailwinds: Iran tensions and the Pentagon's SHIELD/Golden Dome procurement push have highlighted defense supply gaps, with L3Harris named as a beneficiary. Trump's call for defense primes to quadruple output of 'exquisite class' weaponry directly supports L3Harris's missile, sensor, and space franchises.
Bearish
- Severe relative underperformance: LHX is down 17.82% over one year and 21.94% year-to-date, versus SPY gains of 17.22% and 13.11% respectively. The 6-month relative strength gap is a staggering -52.35%, the worst in the dataset, indicating institutional rotation out of this specific name.
- Pinned to 52-week low: At $237.69, the stock trades just 0.9% above its 52-week low of $236.79 and only 62.7% of its 52-week high of $379.23. A decisive breakdown below $236.79 would open a new leg lower with no visible technical floor, and the max drawdown of -37.2% confirms a broken trend.
- Thin and volatile margins: Q1 2026 net margin was 7.35% and operating margin 9.83%, well below the mid-teens typical of best-in-class defense primes. Q4 2025 saw operating margin collapse to 6.66% and net margin to 5.31%, illustrating earnings lumpiness that has undermined management credibility.
- Negative free cash flow in Q1: Q1 2026 produced negative free cash flow of -$194 million and negative operating cash flow of -$95 million, driven by a -$1.161 billion working-capital swing. This contrasts sharply with +$1.804 billion in Q4 2025, raising questions about cash-flow sustainability.
LHX Technical Analysis
L3Harris is in a sustained, broad-based downtrend, with the shares down 17.82% over the trailing year and 21.94% year-to-date, a stark underperformance against a SPY that gained 17.22% over the same twelve months. At $237.69, the stock is trading at just 0.9% above its 52-week low of $236.79 and only 62.7% of its 52-week high of $379.23 — effectively pinned to the bottom of its annual range, which signals persistent distribution rather than a healthy pullback. The maximum drawdown of -37.2% confirms this is a broken trend, and with the 52-week low essentially at the current price, the burden of proof is on buyers to demonstrate that capitulation has occurred rather than a value trap forming.
Short-term momentum is unambiguously negative and, critically, worse than the longer-term trend: the stock is down 9.61% over the past month and 18.39% over three months, versus a 1-year decline of 17.82%, meaning the pace of decline has accelerated in recent months rather than stabilized. Relative strength is deteriorating across every window — -10.30% versus SPY over one month, -24.20% over three months, and -52.35% over six months — the classic signature of a stock being sold on company-specific concerns even as the broader market rallies. The 6-month decline of 30.70% against SPY's +21.65% represents a roughly 52-point relative-strength gap, the most severe reading in the dataset and evidence that institutional money is rotating out of this name specifically, not just out of defense.
Key technical levels are unusually compressed: support sits at the 52-week low of $236.79, just $0.90 below the current $237.69 close, while resistance is the 52-week high at $379.23, a daunting 59.5% above the current price. A decisive breakdown below $236.79 would likely trigger momentum-driven selling and open a new leg lower with no visible technical floor, whereas reclaiming even the $270–280 area (the August consolidation zone) would be the first evidence of a bottoming process. The beta of 0.506 is a critical risk-management input — the stock is roughly half as volatile as SPY on a beta basis, yet it has massively underperformed, meaning the drawdown is idiosyncratic rather than market-driven; position sizing should reflect that low-beta names can still deliver high realized losses when the decline is fundamental, and the short ratio of 2.64 suggests short sellers are not yet crowded enough to fuel a violent squeeze.
Beta
0.51
0.51x market volatility
Max Drawdown
-37.5%
Largest decline past year
52-Week Range
$234-$379
Price range past year
Annual Return
-20.1%
Cumulative gain past year
| Period | LHX Return | S&P 500 |
|---|---|---|
| 1m | -9.5% | +0.6% |
| 3m | -21.7% | +3.3% |
| 6m | -33.5% | +17.4% |
| 1y | -20.1% | +15.0% |
| ytd | -22.3% | +12.9% |
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LHX Fundamental Analysis
Revenue is growing at a solid clip: the most recent quarter (ended April 3, 2026) delivered $5.744 billion in revenue, up 11.93% year-over-year, and the multi-quarter trend is one of steady acceleration — from $5.132 billion in Q1 2025 to $5.426 billion in Q2, $5.659 billion in Q3, $5.648 billion in Q4, and now $5.744 billion. The segment mix shows Space and Airborne Systems as the largest contributor at $2.99 billion, followed by Communication Systems at $1.855 billion and Integrated Mission Systems at $990 million, with the space/sensor and missile-related franchises clearly carrying the growth while the legacy radio business provides a stable base. The trajectory supports the bull case that L3Harris is a structural beneficiary of elevated defense budgets and production ramp-ups, but the market's skepticism centers on whether that top-line growth converts into the earnings and cash the company has promised.
Profitability is positive but thin and volatile: Q1 2026 net income was $512 million on a 7.35% net margin, with gross margin of 25.73% and operating margin of 9.83%, while the prior quarter (Q4 2025) saw net income collapse to $300 million on a 5.31% net margin and just 6.66% operating margin. Gross margin has oscillated between 24.41% and 26.40% over the last five quarters, and the Q4 2025 operating-margin dip to 6.66% — versus 11.18% in Q1 2026 and 11.15% in Q3 2025 — illustrates the earnings lumpiness that has undermined management credibility. For a defense prime, a 9.8% operating margin is below the mid-teens typically achieved by best-in-class peers, and the trailing EPS of just $0.028 (reflecting a very low trailing-twelve-month figure versus $2.74 in the most recent quarter) underscores how distorted the trailing earnings base has become.
The balance sheet is manageable but not fortress-like: debt-to-equity stands at 0.573, the current ratio is 1.189, and ROE is a modest 8.18% with ROA of just 4.38%. Free cash flow on a trailing-twelve-month basis is $2.589 billion, but the quarterly pattern is deeply uneven — Q1 2026 produced negative free cash flow of -$194 million and negative operating cash flow of -$95 million, driven by a -$1.161 billion working-capital swing, compared with +$1.804 billion in Q4 2025 and +$552 million in Q2 2025. The company returned cash aggressively nonetheless, paying $238 million in dividends and repurchasing $296 million of stock in Q1 2026 while repaying $244 million of debt, which is only sustainable if the working-capital drag reverses in subsequent quarters; the 1.58% dividend yield and 56.2% payout ratio are covered on an annual basis but leave little cushion if FCF remains volatile.
Quarterly Revenue
$5.9B
2026-07
Revenue YoY Growth
+8.4%
YoY Comparison
Gross Margin
25.5%
Latest Quarter
Free Cash Flow
$2.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is LHX Overvalued?
Because L3Harris is profitable — Q1 2026 net income of $512 million and positive trailing earnings — the PE ratio is the appropriate primary metric, and the picture is one of a stock that looks expensive on trailing earnings but cheap on forward estimates. The trailing PE is 35.53x while the forward PE is just 17.56x, a roughly 51% compression that implies the market expects a dramatic earnings recovery, consistent with consensus EPS estimates of $20.23 for the coming year versus the distorted trailing figure. The PEG ratio of 4.26, however, warns that even the forward multiple is not obviously supported by the expected growth rate, and the EV/EBITDA of 17.92x and price-to-cash-flow of 18.37x suggest the market is not pricing this as a deep-value defense name.
On peer comparison, the forward PE of 17.56x sits at a modest discount to the broader Aerospace & Defense sector, where large-cap primes typically trade in the 18–22x forward range, while the price-to-sales of 2.61x and EV/sales of 2.43x are broadly in line with a diversified prime of this scale. The price-to-book of 2.91x is unremarkable for the sector, but the 7.35% net margin and 9.83% operating margin are below the peer average, which argues the discount — rather than being a bargain — is a fair reflection of inferior profitability. In other words, L3Harris trades like a second-tier prime: not egregiously expensive, but not cheap enough to compensate for sub-par margins and execution risk.
Against its own history, the current valuation is near the middle-to-lower end of its multi-year band: the trailing PE of 35.53x compares with historical readings ranging from roughly 22x to 63x over the past several years, while the price-to-sales of 2.61x is well below the 7–11x range seen throughout 2021–2025 (the historical ratios data reflects pre-split or differently scaled figures, but the direction is clear). The price-to-book of 2.91x is above the 2.0–2.4x range that prevailed through most of 2023–2025, suggesting book value has not kept pace with the earnings decline. Net-net, the stock is not at a historical extreme, but the combination of a mid-range multiple and a collapsing price means the market is pricing in either a genuine earnings inflection or further fundamental deterioration — the forward PE of 17.56x is the single most important number in the valuation case.
PE
35.5x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 22x~36x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
17.9x
Enterprise Value Multiple
Investment Risk Disclosure
L3Harris faces meaningful financial and operational risks. The balance sheet carries debt-to-equity of 0.573 and a current ratio of 1.189, leaving limited liquidity cushion. Q1 2026 free cash flow was -$194 million with a -$1.161 billion working-capital swing, while the company still paid $238 million in dividends and repurchased $296 million of stock — a combination that is only sustainable if the working-capital drag reverses. Margins are thin and volatile: Q1 2026 operating margin was 9.83%, but Q4 2025 saw it collapse to 6.66%, and gross margin has oscillated between 24.41% and 26.40% over five quarters. With a 7.35% net margin and ROE of just 8.18%, the earnings base is fragile and highly sensitive to execution missteps.
Market and competitive risks are elevated. The stock trades at a forward PE of 17.56x, a modest discount to the 18–22x peer range, but the trailing PE of 35.53x and PEG of 4.26 suggest the market is pricing in a recovery that may not materialize. The beta of 0.506 means the stock is roughly half as volatile as SPY, yet it has massively underperformed — the drawdown is idiosyncratic, not market-driven, so low beta offers little protection. Competitive threats are emerging: private company Saronic's rapid growth in robotic warships could disrupt established contractors, and the Pentagon's SHIELD contract shifts procurement toward a competitive marketplace model, potentially pressuring incumbent margins. Regulatory and geopolitical risks, while currently tailwinds, could reverse if Iran tensions de-escalate.
The worst-case scenario would be a continued failure to convert revenue growth into cash flow and earnings, triggering a breakdown below the 52-week low of $236.79. With the stock at $237.69, a drop to the analyst low target of $269 is actually upside, but if estimates are cut, the stock could fall to the $200–210 range, representing a 12–16% loss from current levels. A more severe scenario — a recession, defense budget sequestration, or a major program cancellation — could push the stock toward $180, a 24% decline. The max drawdown of -37.2% shows the stock has already lost over a third of its value from its peak, and without a fundamental catalyst, further downside of 15–25% is realistic.
FAQ
The most severe risk is cash-flow volatility: Q1 2026 free cash flow was -$194 million with a -$1.161 billion working-capital swing, and if this persists, the dividend and buyback programs could become unsustainable. Second, margin compression is a threat, as Q4 2025 operating margin fell to 6.66% from 11.18% in Q1 2026, and the company's 9.83% operating margin is already below the mid-teens of best-in-class peers. Third, competitive disruption from private players like Saronic in uncrewed systems could pressure L3Harris's market share in key franchises. Fourth, macro and geopolitical risks: while Iran tensions are currently a tailwind, a de-escalation could remove the urgency for defense budget increases, and the stock's low beta of 0.506 offers little protection if the fundamental narrative deteriorates.
The 12-month forecast has three scenarios: a base case (50% probability) with a target range of $269–$338, assuming modest margin improvement and stable 8–10% revenue growth; a bull case (25% probability) targeting $338–$405, driven by successful margin recovery and defense budget tailwinds; and a bear case (25% probability) targeting $200–$269, assuming continued execution missteps and a breakdown below the 52-week low. The base case is most likely, with the key assumption being that free cash flow turns positive and operating margins hold above 10%. The average analyst target of $338.50 aligns with the upper end of the base case and the lower end of the bull case.
LHX appears fairly valued to slightly undervalued on forward earnings but expensive on trailing metrics. The trailing PE is 35.53x, while the forward PE is 17.56x, a 51% compression that implies the market expects a dramatic earnings recovery. The forward PE sits at a modest discount to the 18–22x range for large-cap defense primes, but the PEG ratio of 4.26 and EV/EBITDA of 17.92x suggest the stock is not cheap on all measures. The price-to-sales of 2.61x is well below the 7–11x range seen in 2021–2025, but the price-to-book of 2.91x is above the 2.0–2.4x range from 2023–2025. Net-net, the market is pricing in an earnings inflection; if it materializes, the stock is undervalued, but if not, it is fairly valued at best.
From a risk/reward perspective, LHX is a Hold rather than a strong Buy. The stock trades at $237.69, just 0.9% above its 52-week low of $236.79, and has underperformed SPY by 52.35% over six months. However, the average analyst target of $338.50 implies 42.4% upside, and the forward PE of 17.56x is undemanding if the $20.23 consensus EPS is achieved. The biggest downside risk is a breakdown below $236.79, which could push the stock to $200–210, a 12–16% loss. It is a good buy for long-term investors with a 2–3 year horizon who believe in the defense budget tailwinds and can tolerate near-term volatility, but short-term traders should wait for a confirmed bottom.
LHX is better suited for long-term investment with a minimum holding period of 2–3 years. The stock is in a sustained downtrend, down 21.94% year-to-date and 17.82% over one year, with a max drawdown of -37.2%, making it unsuitable for short-term trading unless one is betting on a technical bounce. The beta of 0.506 indicates low volatility relative to the market, but the stock has delivered high realized losses due to idiosyncratic factors. The dividend yield of 1.58% and the multi-year defense budget tailwinds support a long-term thesis, but investors must be patient as the company works through margin and cash-flow issues. A short-term trader could target a bounce to $270–280, but the risk of a breakdown below $236.79 is significant.