L3Harris Technologies (LHX) is back in focus after a US$25 million expansion of its Advanced Manufacturing Facility South in Huntsville and a fresh cooperation agreement with Airbus Helicopters in Canadian defence.

Despite the US$25 million facility expansion and new Airbus cooperation, L3Harris’ recent share price momentum has been mixed, with a 30 day share price return of 2.73% but a 90 day share price decline of 14.9%. However, the 1 year total shareholder return of 27.47% and 3 year total shareholder return of 72.71% point to stronger longer term performance.

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With L3Harris investing in extra manufacturing capacity and signing fresh defence cooperation agreements, yet trading with an indicated intrinsic discount of about 24%, readers may wonder: is there real value here, or is the market already pricing in future growth?

Most Popular Narrative: 19.4% Undervalued

The most followed valuation narrative currently points to a fair value of about $381.95 for L3Harris Technologies, compared with the last close at $307.83. This puts the recent contract and facility news into a wider context.

The U.S. defense budget is expected to grow, with new defense initiatives and a potential increase in funding that could benefit L3Harris, supporting revenue growth. L3Harris is well-positioned in several key growth areas, such as missile warning and tracking, due to recent investments and capability alignment, likely increasing future revenue.

Want to see what sits behind that confidence in future revenue and earnings power? The narrative leans on rising margins, higher cash generation, and a valuation multiple that still assumes discipline on pricing.

Result: Fair Value of $381.95 (UNDERVALUED)

However, investors also need to weigh dependency on other contractors and the higher risk in fixed price development contracts, which could put pressure on revenues and margins if projects slip.

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Next Steps

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.