L3Harris Technologies Inc. is an aerospace and defence technology innovator. The company designs, develops, and manufactures radio communications products and systems, including Single-Channel Ground and Airborne Radio Systems (SINCGARS). The company also provides advanced defence and commercial technologies across air, land, sea, space, and cyber domains.
The company is one of the top six largest defence contractors in the US. Appetite for defence solutions remains robust, underpinned by strong domestic and international government spend. The company remains well-positioned to benefit from expected offshore growth, post-merger synergies, and its continued focus on operational excellence and innovation.
Technically, the price bounced off some major support making the stock attractive as an investing option (see the black trendline on the main chart). This signifies strong demand for the stock.
The stock remains below its 200-day simple moving average and a cross above will confirm a bullish long-term trend. Hence, the trade is regarded as a counter-trend strategy.
According to the Relative Strength Index (RSI), the stock will be overbought at ~$250. This classifies our profit target of $215 as realistic.
We suggest a low capital at-risk allocation to this trade.
Share Information
| Share code | LHX |
|---|---|
| Industry | Industrials - Networking Technology |
| Market Capital (USD) | 36.77 billion |
| One year total return | -13.13% |
| Return year-to-date | -5.65% |
| Current price (USD) | 194.10 |
| 52 weeek high (USD) | 255.10 |
| 52 week low (USD) | 174.55 |
| Financial year end | December |
| Closing paragraph | The stock holds a Beta of 0.72, which indicates it is less volatile than the S&P 500 index. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 12.80 | 12.27 | 13.33 | 14.29 |
| Growth (%) | - | -4.14 | 8.64 | 7.15 |
| Dividend Per Share (USD) | 4.48 | 4.78 | 5.23 | 5.63 |
| Growth (%) | - | 6.58 | 9.49 | 7.69 |
| Forward PE (times) | - | 15.82 | 14.56 | 13.59 |
| Forward Dividend Yield (%) | - | 2.46 | 2.69 | 2.90 |
| Closing paragraph | Earnings is expected to be constrained over FY23, after which, growth is expected to improve towards higher-single-digits from FY24. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
Update on previous Trade Ideas
| Share Name and position |
HLMN - Buy (Continue to hold) |
HACK - Buy (Continue to hold) |
VXF - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 8.01 | 47.58 | 139.26 |
| Current | 8.95 | 49.80 | 145.59 |
| Movement | 11.7% | 4.7% | 5.6% |
| Summary text |
The price continues to display repetitive cycles in sequences and remains above its 200-day simple moving average. Upside momentum further supports the trade
Our profit target is $10 with a trailing stop-loss at $8.35. Exit the position on 6 October 2023. |
The price remains above a support level and continues to trade above the 200-day simple moving average. Upside momentum has halted, which is a concern.
Our profit target is $55 with a trailing stop-loss of $47.80. Exit the position around 4 August 2023 |
An incomplete symmetrical triangle pattern remains of interest. The ETF is trading above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is $153 with a trailing stop-loss at $140. Exit the position on 2 November 2023. |
Update on previous Trade Ideas
| Share Name and position |
COST - Buy (Continue to hold) |
LIT - Buy (Continue to hold) |
AIG - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 501.27 | 62.48 | 56.08 |
| Current | 524.20 | 64.01 | 55.97 |
| Movement | 4.6% | 2.4% | 2.3% |
| Summary text |
We continue to observe a confluence of technical indicators that aligns with a bullish trend. The share is trading above its 200-day simple moving average. Upside price momentum supports a bullish bias.
Our profit target is $560, with a trailing stop-loss of $502. Exit the position around 7 July 2023. |
The stock is trading in a falling wedge pattern within a previous uptrend. The stock is testing its 200-day simple moving average. Upward momentum has halted, which is concerning.
Our profit target is $71 with a trailing stop-loss at $60.60. Exit the position on 30 August 2023. |
The stock is currently displaying a broadening top pattern, with the price trending slightly above its 200-day simple moving average. Upside price momentum supports a bullish bias.
Our profit target is $62, with a trailing stop-loss of $52.55. Exit the position around 2 August 2023. |
