L3Harris Technologies (LHX) is a U.S. defense and technology company that trades at a discount to many of its peers on near-term metrics. It could also benefit from a Donald Trump presidency, which now looks increasingly likely, with the former president vowing to overhaul the military and invest in Iron Dome-like technology. That’s why I’m bullish on the stock.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
L3Harris Technologies and a Trump Presidency
The Republican Party, under the leadership of Donald Trump, has put forward its plans for the next U.S. defense policy, focusing on significant military enhancement and modernization. This plan includes overhauling the military infrastructure, limiting foreign engagements, and integrating advanced technologies such as artificial intelligence (AI) in defense strategies.
The 2024 Republican Party Platform reads, “Republicans will ensure our Military is the most modern, lethal and powerful Force in the World. We will invest in cutting-edge research and advanced technologies, including an Iron Dome Missile Defense Shield, support our Troops with higher pay, and get woke Leftwing Democrats fired as soon as possible.”
Trump’s vision emphasizes rebuilding the military by increasing defense budgets and modernizing equipment to ensure the U.S. maintains its strategic advantage, and the Iron Dome is a reference to Israel’s missile defense system, which is widely considered one of the most effective of its type in the world.
Given the sheer size of the U.S., this could be a massive and costly undertaking — one that could be highly lucrative for defense contractors.
Artificial intelligence (AI) will likely be a major focus of this military overhaul. Reports suggest that Trump’s allies have drafted plans to remove burdensome regulations to hasten the modernization of the military, which could favor Silicon Valley technology companies and disruptive innovators like L3Harris.
Moreover, Trump’s policy seeks to reduce American involvement in prolonged foreign conflicts, focusing instead on strategic, high-impact operations that safeguard national interests without extensive deployments. In turn, this reflects Reagan’s “peace through strength” mantra.
L3Harris Technologies: A Beneficiary of More Pentagon Spending
According to the company itself, L3Harris is the sixth-largest defense contractor in the U.S., one that focuses on innovation and is a trusted disruptor. It’s been performing very well in recent years, with $20.16 billion in revenue over the trailing 12 months, up 15% over the previous year.
While all defense contractors in the U.S. would likely benefit from increased military spending, L3Harris could be in a particularly strong position for several reasons. The first is its possible contribution to an Iron Dome-type system.
L3Harris provides advanced radar and communication systems for detecting and intercepting missile threats, and its expertise in infrared sensors, remote sensing, and advanced processing can enhance an Iron Dome-like system’s ability to track and neutralize multiple threats simultaneously. While the Florida-based company is already working with the U.S. military on space-based tracking for hypersonic threats, a nationwide Iron Dome system would undoubtedly require even greater coverage.
L3Harris is also delivering cutting-edge technology, notably in the space domain, which would likely receive more attention, even in the absence of a net funding boost from the Pentagon. However, greater defense spending would increase the speed at which new disruptive technologies are adopted.
Finally, while the U.S. Department of Defense is the company’s largest client, L3Harris works with governments and militaries worldwide, the majority of which are NATO members. Trump has said he intends to make the U.S.’s European partners spend more on their own defense. Greater allied defense spending will also likely benefit L3Harris.
L3Harris: Cheaper Than The Rest
L3Harris trades at 18.5x non-GAAP forward earnings. That puts it at a modest discount to some of its largest peers in the U.S. and at a 6.5% discount to the Industrial sector average. This figure then falls to 16.9x in 2025 and 15.2x in 2026. This stable and modest pace of growth leads us to a fairly unexciting price-to-earnings-to-growth (PEG) ratio of 2x — broadly in line with peers.
However, it’s worth factoring in the dividend yield of 1.91% and the fact that L3Harris has beaten earnings expectations in all of the last six quarters. Moreover, I’m not sure existing forecasts are factoring in the impact of Trump returning to the White House. This could really boost earnings in the medium term.
Is L3Harris Technologies Stock a Buy, According to Analysts?
On TipRanks, LHX comes in as a Moderate Buy based on eight Buys, three Holds, and one Sell rating assigned by analysts in the past three months. The average LHX stock price target is $243.40, implying 3.7% upside potential.
The Bottom Line on L3Harris Technologies Stock
The U.S. defense sector could receive a major boost if Donald Trump returns to office, and L3Harris could be among those to benefit, noting its trusted disruptor status and missile tracking technologies. While the valuation metrics are decent but not exceptional at the moment, a new Trump administration could represent a boom period for this defense contractor.
