L3Harris Reports Disappointing Earnings, Shares Drop
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 23h ago
0mins
Source: seekingalpha
- Revenue and Earnings Miss: L3Harris reported fourth-quarter revenue of $5.6 billion, a 2% increase year-over-year but below the consensus estimate of $5.76 billion, while the 2026 adjusted earnings guidance of $11.30 to $11.50 per share falls short of the $12.44 consensus, indicating market pressures.
- Government Shutdown Impact: The delayed contract awards due to the government shutdown significantly affected sales in the space and airborne systems business, with 2026 revenue forecasted between $23.0 billion and $23.5 billion, aligning closely with the consensus estimate of $23.3 billion, reflecting future growth uncertainties.
- Profitability Improvement: Despite a year-over-year decline in net income to approximately $299 million, or $1.59 per share, the adjusted earnings of $2.86 per share exceeded Wall Street's expectation of $2.76, showcasing the company's efforts in cost control and margin enhancement.
- Operating Profit Decline: Operating income fell to $393 million from $569 million a year earlier, with the operating margin decreasing from 10.3% to 7.0%, primarily due to rising corporate expenses and weaker performance at Aerojet Rocketdyne, highlighting operational challenges.
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Analyst Views on LHX
Wall Street analysts forecast LHX stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for LHX is 253.50 USD with a low forecast of 212.00 USD and a high forecast of 280.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
11 Buy
3 Hold
0 Sell
Strong Buy
Current: 356.020
Low
212.00
Averages
253.50
High
280.00
Current: 356.020
Low
212.00
Averages
253.50
High
280.00
About LHX
L3Harris Technologies, Inc. provides end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of national security. Its segments include Space & Airborne Systems (SAS), Integrated Mission Systems (IMS), Communication Systems (CS), and Aerojet Rocketdyne (AR). The SAS segment supplies full mission solutions as a prime and subsystem integrator in the space, airborne and cyber domains. The IMS segment delivers differentiated mission capabilities and prime systems integration to support intelligence, reconnaissance and surveillance (ISR), passive sensing and targeting, electronic attack, autonomy, power and communications, networks and sensors. CS enables warfighters across all domains with solutions critical to mission success even in the contested environments. The AR segment provides propulsion, power and armament products and systems to the U.S. Government, including the DoD, NASA and various aerospace and defense prime contractors.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
L3Harris Technologies Q4 2025 Earnings Call Highlights
- Performance Growth: L3Harris reported Q4 2025 revenue of $5.6 billion, a 6% year-over-year increase, with adjusted EPS of $2.86 reflecting a 10% growth, indicating strong performance across all business segments and sustained market demand.
- Orders and Contracts: The company reported a record backlog exceeding $38 billion, with a book-to-bill ratio of 1.3, highlighting robust future revenue potential, particularly from a $2.2 billion contract for next-generation airborne early warning jets from South Korea.
- Strategic Restructuring: L3Harris reorganized its business segments from four to three and plans an IPO for its Missile Solutions business in the second half of 2026, expected to generate over $4 billion in revenue, further focusing on the defense market.
- Future Outlook: Revenue guidance for 2026 is set between $23 billion and $23.5 billion, anticipating 7% organic growth, with free cash flow expected to reach $3 billion, demonstrating the company's ongoing investment and growth potential in the defense sector.
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