2023-07-06 09:17:22 ET
L3Harris Technologies’ ( NYSE: LHX ) possible sale of its avionics business is a positive development for the aerospace and defense company, analysts at Bank of America Securities said on Wednesday.
“We look favorably on the company’s efforts to divest non-core assets,” Ronald J. Epstein, analyst at BofA, said in a July 5 report.
L3Harris ( LHX ) was said to be exploring a sale of its avionics business for $1 billion, Bloomberg News reported on July 3, citing people familiar with the matter. The company hasn’t confirmed or denied the report.
“It was made clear that any divestiture would only be of the commercial avionics business in the integrated mission systems (IMS) segment,” BofA said. “The company intends to retain missions avionics work on platforms such as the F-35” amid its efforts to be one of the biggest prime contractors for the Pentagon.
L3Harris’s ( LHX ) commercial aviation solutions unit generated $660 million in revenue last year. The business may receive a valuation with an enterprise value-to-EBITDA multiple of 13 to 14 times based on comparable companies and current trading levels, indicating yearly EBITDA of $75 million, according to BofA.
The bank maintained its Neutral rating as L3Harris ( LHX ) “still has much to prove on margin expansion as supply-chain woes persist,” BofA said.
More about L3Harris
- L3Harris evaluating sale of its $1B avionics business - report
- U.S. Chamber of Commerce backs L3Harris merger with Aerojet
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L3Harris’s possible sale of avionics business is positive: BofA