TLDR
- L3Harris received a $4.7 billion, seven-year contract from Lockheed Martin for PAC-3 missile propulsion systems
- It is the largest PAC-3 propulsion award in L3Harris history
- CalSTRS increased its LHX position by 27,873% in Q2, now holding 44.98% of the company worth $24.34 billion
- LHX beat Q2 earnings with $3.13 EPS vs $2.80 expected, and revenue of $5.88 billion, up 8.4% year over year
- The stock opened at $256.45, near its 52-week low of $256.05, with analysts holding a consensus “Moderate Buy” and average price target of $360.45
L3Harris Technologies (LHX) has secured a $4.7 billion contract from Lockheed Martin to produce propulsion systems for the PAC-3 Missile Segment Enhancement interceptor. The stock opened at $256.45 on Tuesday, close to its 52-week low of $256.05.
L3Harris Technologies, Inc., LHX
The deal runs over seven years and is the largest PAC-3 propulsion award the company has received to date. L3Harris says it aligns with a long-term framework tied to the Department of Defense.
The contract covers three key components: the advanced two-pulse solid rocket motor, the Lethality Enhancer, and the Attitude Control Motors. These are core elements of the MSE interceptor system.
The contract is currently undefinitized, meaning final pricing and terms are still being worked out. L3Harris flagged that actual results depend on continued funding up to the full contract value.
To support production, L3Harris broke ground on two new facilities at its Camden, Arkansas site in June. Those facilities are expected to be operational in 2027.
The Camden expansion adds to a broader manufacturing push. L3Harris has built around 60 new facilities and added more than one million square feet of space across Alabama, Virginia, and Arkansas.
Ken Bedingfield, President of Missile Solutions at L3Harris, said the award allows the company to keep expanding PAC-3 propulsion production capacity. That’s a straightforward read for a business that has been investing heavily in this area for years.
Institutional Interest Surges
On the investor side, the California State Teachers Retirement System (CalSTRS) made a head-turning move in Q2, growing its LHX position by 27,873%. It now holds 83.76 million units of the stock, valued at $24.34 billion, equal to nearly 45% of the company.
That kind of institutional conviction stands out, especially with the stock trading near 52-week lows. Overall, institutional investors own 84.76% of L3Harris.
Earnings Beat, But Targets Cut
L3Harris posted a strong Q2 earnings report. EPS came in at $3.13, beating the $2.80 consensus by $0.33. Revenue hit $5.88 billion, up 8.4% year over year and above the $5.81 billion estimate.
The company set full-year 2026 EPS guidance at $11.80 to $12.00, with analysts expecting $11.88 for the fiscal year.
Despite the earnings beat, several analysts trimmed their price targets. UBS cut its target from $312 to $298. Susquehanna lowered from $410 to $350. BNP Paribas Exane dropped from $330 to $310.
The consensus rating remains “Moderate Buy” with an average price target of $360.45, well above where the stock is trading.
L3Harris also declared a quarterly dividend of $1.25 per unit, payable September 18, representing a 1.9% annual yield. The ex-dividend date was September 4.
The 52-week high sits at $379.23, putting the stock roughly 48% below that level at the current open price of $256.45.
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