L3Harris stock price target raised to $324 from $286 at Bernstein on strong Q2

L3Harris Technologies reported strong second-quarter results, with non-GAAP adjusted EPS of $2.78 and revenue of $5.43 billion, both exceeding consensus estimates, supported by a robust 1.5x book-to-bill ratio. In response, Bernstein SocGen Group raised its price target to $324 and maintained an Outperform rating, citing a stronger growth outlook, particularly for its Aerojet Rocketdyne division, and favorable defense budget exposure. RBC Capital also increased its price target to $280, reflecting the company's positive financial health and market position.

Analysis

L3Harris Technologies (LHX) delivered a strong second-quarter performance, significantly surpassing market expectations and reinforcing a positive outlook. The company reported non-GAAP adjusted earnings per share of $2.78, which exceeded the consensus estimate of $2.49, on revenue of $5.43 billion against a $5.31 billion forecast. This financial beat is underpinned by solid operational metrics, including a segment operating margin of 15.9% and a robust book-to-bill ratio of 1.5x, indicating strong demand and a growing backlog that supports future revenue visibility. Performance was particularly strong in the Integrated Mission Systems, Space & Airborne Systems, and the recently acquired Aerojet Rocketdyne divisions, although Communication Systems revenue was slightly below expectations. In response to these results, which reflect favorable exposure to defense budget trends, Bernstein SocGen Group raised its price target to $324 and reiterated its 'Outperform' rating, increasing its valuation multiple to a 15.9x EV/EBITDA. RBC Capital also lifted its target to $280, though it maintained a more neutral 'Sector Perform' rating. The stock's recent momentum, a 27.57% gain over six months, combined with a favorable PEG ratio of 0.68, suggests the market is positively reacting to the company's execution and growth profile.

Key Decisions for Investors

• Given the significant earnings and revenue beat coupled with a strong 1.5x book-to-bill ratio, investors should view these results as a strong validation of the company's growth trajectory and operational execution.
• The performance of the Aerojet Rocketdyne division and the company's ability to capitalize on defense budget tailwinds are key catalysts and should be monitored closely, as they are central to the upgraded analyst outlooks.
• While the stock's 27.57% six-month return indicates strong momentum, its 0.68 PEG ratio suggests growth may still be attractively priced, warranting a portfolio review, especially considering Bernstein's view of LHX as a top pick in the U.S. defense sector.