L3Harris Technologies Inks Deal to Sell ESSCO Business; Shares Slip 1%

L3Harris Technologies (LHX) has inked a deal to sell its L3 ESSCO business to Communications & Power Industries (CPI). The financial terms of the deal have been kept under wraps.

Shares of the U.S.-based technology company, defense contractor and information technology services provider were down 1% and closed at $231.74 on September 3. (See L3Harris Technologies stock charts on TipRanks)

ESSCO manufactures metal space frame ground radomes that cater to a huge range of applications, including air defense, weather radar, air traffic control and satellite tracking.

ESSCO will compliment CPI’s existing radome capabilities, CPI Radant Technologies Division, and its large structure fabrication business, Satcom & Antenna Technologies Division.

The acquisition, which is subject to certain regulatory approvals, is expected to close by the end of 2021.

The President and COO of CPI, Andy Ivers, said, “The combination of our organizations will enable both businesses to grow and will enhance the portfolio of products and services we are able to offer customers for communications, radar and electronic warfare applications.”

Morgan Stanley analyst Kristine Liwag recently downgraded LHX from a Buy to a Hold with the price target of $238 (2.7% upside potential).

Liwag believes that revenue growth from Space, upside from share buybacks and cost synergies from its combination deal “all appear priced in” at the current stock price levels.

Overall, the stock has a Moderate Buy consensus rating based on 7 Buys and 3 Holds. The average L3Harris Technologies price target of $255.40 implies 10.2% upside potential from current levels. Shares of L3Harris Technologies have jumped 29% over the past year.

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