Key Takeaways:
- Double-Digit Growth: L3Harris posted 10% organic revenue growth in Q3, while Aerojet Rocketdyne delivered record revenue and grew 15%.
- Price Projection: Based on current execution, the stock could reach $381 by December 2027.
- Potential Gains: This target implies a total return of 7.5% from the current price of $354.
- Annual Return: Investors could see roughly 3.8% annual growth over the next 1.9 years.
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L3Harris Technologies (LHX) delivered its strongest quarter in years, with double-digit organic growth across all four segments.
CEO Chris Kubasik is executing a strategy centered on trusted disruption, combining the scale of established defense primes with the speed of emerging technology partners.
The company is positioned at the center of critical defense modernization efforts. From missile warning satellites already in orbit to solid rocket motors for every major interceptor program, L3Harris is delivering innovation where it matters most.
Here’s what’s driving results:
- Record financial backlog of $8.3 billion at Aerojet Rocketdyne, with double-digit growth expected for the foreseeable future.
- Eight consecutive quarters of sequential margin expansion, reaching 15.9% in Q3.
- $2.2 billion award from South Korea for next-generation airborne early warning business jets, reinforcing L3Harris as the premier mission system integrator.
Despite strong momentum, L3Harris stock trades at $354, offering modest upside for investors who recognize the company’s missile defense capabilities and international expansion.
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What the Model Says for L3Harris Technologies Stock
We analyzed L3Harris through the lens of its transformation into a defense innovator focused on speed and scale. The company is methodically investing ahead of demand in missile defense, solid rocket motor production, and software-defined communication systems.
With satellites already in orbit and production capacity expanding, L3Harris is positioned to lead next-generation missile defense architecture. The Aerojet Rocketdyne acquisition continues to exceed expectations, with the solid rocket motor business showing no signs of slowing.
Using a forecast of 5.2% annual revenue growth and 16.4% operating margins, our model projects the stock will rise to $381 within 1.9 years. This assumes a 24x price-to-earnings multiple.
That represents a modest increase from L3Harris’s current P/E of 23.3x. As the company delivers on missile defense contracts and scales Aerojet Rocketdyne production, the multiple should reflect sustained profitability and strong program execution.
The real value lies in capturing defense budget increases, completing the transition to higher-margin programs, and converting demand signals into multiyear contracts that justify additional capacity investments.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for LHX stock:
1. Revenue Growth: 5.2%
L3Harris’s growth story centers on missile defense, international expansion, and Aerojet Rocketdyne’s production ramp.
Missile Defense Leadership: The company has satellites in orbit, in production, and in backlog across multiple Space Development Agency tranches. Management expects to receive awards for additional missile-tracking programs once the government shutdown ends.
Aerojet Rocketdyne Momentum: The business reached a record financial backlog of $8.3 billion in Q3, growing 15% organically. L3Harris is on every major interceptor program, including the Standard Missile, PAC-3, THAAD, and Next Generation Interceptor programs.
Capacity Expansion: The company is investing in new facilities and production lines for solid rocket motors. For PAC-3, quarterly deliveries have increased more than 400% since the acquisition. Management needs multiyear contracts to justify doubling or tripling production capacity.
International Growth: The $2.2 billion award from South Korea demonstrates strong international demand. L3Harris expects international revenue to grow from 22% to 25%, with wins in Poland and eight European countries for electronic warfare systems.
2. Operating margins: 16.4%
L3Harris is delivering margin expansion while investing in capacity.
Consistent Improvement: Segment operating margin reached 15.9% in Q3, marking eight consecutive quarters of sequential expansion. Management raised full-year guidance to the high 15% range.
LHX NeXt Program: Cost savings initiatives drove margin gains across all four segments. The Program Digital Cockpit, built on Palantir infrastructure, provides real-time program metrics that improve execution.
Segment Performance: Communication Systems delivered 26.1% margins. Aerojet Rocketdyne expanded margins to 12.7%, up 130 basis points, driven by improved program performance and production efficiencies.
3. Exit P/E Multiple: 24x
The market currently values L3Harris at 23.3x earnings. We assume the multiple expands to 24x through our forecast period.
Reflects Strong Execution: L3Harris’s P/E has averaged 23.3x over the past year and 17.7x over the past 5 years. The higher multiple acknowledges consistent margin expansion and strong program wins.
Supports Long-Term Value: As missile defense contracts are awarded and Aerojet Rocketdyne scales production, L3Harris should command a premium multiple. The company expects 2026 revenue to exceed its financial framework, with sustained double-digit growth at Aerojet Rocketdyne.
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What Happens If Things Go Better or Worse?
Defense contractors face budget uncertainty and program execution risk. Here’s how L3Harris stock might perform under different scenarios through December 2029:
- Low Case: If revenue growth slows to 4.4% and margins compress to 10.0%, the stock still offers a 2.8% annual return.
- Mid Case: With 4.9% growth and 10.2% margins, we expect an annual return of 7.6%.
- High Case: If missile defense awards accelerate and L3Harris maintains 10.3% margins while growing at 5.3%, returns could hit 11.9% annually.
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The range reflects execution on missile defense, success in scaling Aerojet Rocketdyne production, and timing of multiyear contract awards.
In the low case, the government shutdown extends longer than expected, or missile defense funding gets delayed in reconciliation.
In the high case, missile defense contracts are awarded in Q4, Aerojet Rocketdyne receives multiyear agreements that enable capacity investments, and international wins accelerate meaningfully.
How Much Upside Does L3Harris Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
