Key Stats for L3Harris Stock
- 1- Year Price Change for L3Harris stock: 60%
- $LRX Share Price as of Jan. 13: $362
- 52-Week High: $341
- $LRX Share Price Target: $348
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What Happened?
L3Harris (LHX) stock surged 11.4% in early market trading on Tuesday after it announced a groundbreaking $1 billion investment from the U.S. Department of Defense.
The Pentagon will become an equity investor in L3Harris’ rocket motor business, which produces propulsion systems for missiles like Tomahawk, Patriot, and THAAD.
The deal marks the first time the Pentagon has invested directly in a defense supplier this way. L3Harris plans to spin off its Missile Solutions unit into a new publicly traded company later in 2026, with the government’s $1 billion stake converting to common equity at the IPO.
The investment guarantees steady demand for rocket motors, which are in critically short supply. L3Harris expects to more than triple production capacity by 2030 through factory expansions in Arkansas, Virginia, Alabama, and California.
The company will add over 60 buildings and 1 million square feet of new production space.
CEO Christopher Kubasik called the deal “first-of-its-kind” and said it positions the company as a key partner in strengthening America’s defense industrial base. Under Secretary Michael Duffey said the investment represents a fundamental shift in how the Pentagon secures its munitions supply chain.
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What the Market Is Telling Us About LHX Stock
The massive rally in LHX stock suggests investors see this as a major win. The government backing essentially de-risks the business by guaranteeing long-term demand.
L3Harris will retain majority ownership and control of the new missile company, meaning shareholders get to participate in the upside while the government absorbs some of the downside risk.
- The deal comes just days after President Trump criticized defense contractors for slow weapons production.
- It’s part of a broader push by the Pentagon to invest directly in critical suppliers rather than waiting for traditional procurement processes to play out.
- The Department of Defense recently signed a seven-year deal with Lockheed Martin to triple Patriot missile production.
For L3Harris, the transaction solves a major capital problem. The company needs billions of dollars to expand rocket motor capacity, but spending that much CapEx would have eaten into free cash flow for existing shareholders.
By bringing in the Pentagon as an anchor investor and taking the business public, L3Harris can fund the expansion without straining its balance sheet.
Revenue for the Missile Solutions business is expected to more than double by 2030, with strong margins and free cash flow generation.
Management said the factories being built today will support demand well into the 2040s, creating durable long-term growth.
The government stake could create conflicts of interest since the Pentagon will own part of a company that bids on defense contracts. Competitors may cry foul. The deal structure is highly unusual and could face regulatory scrutiny.
But for now, the market is focused on the positives. LHX stock is betting that guaranteed government demand plus public market access creates a winning combination.
The company plans to provide full 2026 guidance when it reports fourth-quarter earnings later this month.
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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!
