LHX - L3Harris: Q1 Beat And Raise Confirms Top Pick
2024-05-02 09:26:54 ET
Summary
- L3Harris reported a solid Q1, beating street estimates on top and bottom line and revising its full-year margin guidance upwards to >15% from previously expected ~15%.
- The quarter saw strong space performance across SAS and AR segments with significant YoY sales growth and increased profitability from efficiency gains and maturing programs.
- Despite the raise, I continue to view full-year guidance as conservative at just ~2% implied organic growth. I estimate further upward revisions should YTD performance continue into Q2.
- I reiterate my Overweight rating on shares and raise my YE24 price target by 13% to $283/sh, implying ~31% price upside and confirming LHX stock as my top pick in US defense.
I initiated my coverage of L3Harris Technologies ( LHX ) in October last year, rating the shares Overweight on a favorable portfolio focusing on the highest-growth military end markets and a heavily discounted valuation due to investor concerns about M&A activity and rising debt levels. Following the company's Investor Day , I saw management's mid-term outlook as heavily supportive of my thesis and derisking most investor concerns, making LHX my top pick in the US defense sector in January. After initial gains, following my most recent note, shares have traded essentially flat, underperforming the broader US market and US Prime peer General Dynamics (GD) which benefitted from the ongoing aerospace upcycle through its Gulfstream bizjet exposure....
L3Harris: Q1 Beat And Raise Confirms Top Pick