L3Harris raised to Buy at BofA, ‘a defensive butterfly is emerging’

Investing.com — Bank of America upgraded L3Harris Technologies (NYSE:) to a Buy rating from Neutral on Thursday, raising its price target for the stock to $300 from $240, as analysts see the defense contractor successfully transforming into a leaner, more agile company. 

Following L3Harris’ “LHX next” initiative, unveiled during its 2023 Investor Day, BofA analysts noted a promising shift, describing L3Harris as a “defensive butterfly” now better equipped to deliver on growth commitments and capitalize on industry trends.

The bank explains that a key aspect of L3Harris’ transformation is its recent partnership with Palantir Technologies (NYSE:), which BofA sees as strategically sound. 

By leveraging Palantir’s AI-powered data integration capabilities, L3Harris aims to enhance supply chain visibility, streamline costs, and support new AI-driven product development, said BofA. 

They state that the move positions L3Harris to navigate and thrive in an evolving defense-tech landscape. 

“We see LHX focusing on their core capabilities while leveraging Palantir’s software capabilities as a winning formula with future upside,” BofA analysts said.

Additionally, they note that surging demand for munitions and propulsion technologies offers significant growth opportunities for L3Harris. 

BofA says that with its solid rocket motor production, L3Harris is well-positioned to supply critical defense needs. 

The bank adds that the company’s wins on the Next-Gen Interceptor and as a propulsion provider for the Glide Phase Interceptor underscore its competitive edge in this high-demand sector.

Financially, the company is already exceeding its $400 million run-rate savings goal for 2024 and now projects savings of $600 million by year-end, moving closer to its $1 billion target, notes the bank