LHX

Rating neutralTentativeAI Memo

L3Harris

As of 2026-05-03/Confidence medium

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Data freshness

AI Memo

As of 2026-05-03 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Report quality notice

peer set is too generic or lacks enough direct operating comparators

Action

neutral

Confidence

medium

Horizon

—

Key catalyst

Next earnings print must show cash-flow normalization • 2026-07-30

Expected move: +9%

Biggest risk

The bear case is that the earnings beat was already partly anticipated, the guidance raise was only incremental, free cash flow was negative in Q1, and immediate coverage suggested investors still focused on guidance quality and cash conversion rather than the headline beat. Verified T+3 sell-side target or estimate revisions were not available in the packet, so conviction on a thesis upgrade remains limited.

Invalidation

Break below $280 or thesis failure.

What would change my mind?

The post-earnings bull case is straightforward: LHX produced a clean top-line beat, raised EPS guidance, posted a record backlog, and showed broad-based segment growth tied to defense demand that appears aligned with current U.S. and allied procurement priorities [#8-K-2026-04-30].

Research note

Recommendation

neutral

Confidence

medium

As of

2026-05-03

Base target

$335

p=50%

Bull target

$360

p=25%

Bear target

$280

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q1 beat with EPS guide raise, but post-print digestion remains mixed
Backlog conversion and defense-demand alignment support medium-term upside if execution holds
The post-earnings bull case is straightforward: LHX produced a clean top-line beat, raised EPS guidance, posted a record backlog, and showed broad-based segment growth tied to defense demand that appears aligned with current U.S.

BearKey bullets

Immediate market reaction was mixed: results beat, but post-print coverage highlighted guidance concerns and the stock closed at $313.37 on May 1, 2026 versus $321.40 on April 29, 2026, a roughly 2.5% decline across the reaction window.
Management's own forward-looking disclosures still point to risk from U.S.
government spending priorities, contract mix, supply-chain disruption, indebtedness, and tax-rate variability [#8-K-2026-04-30].

WatchKey bullets

Next earnings print must show cash-flow normalization

Summary

High-level snapshot

Recommendation

neutral

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $335 (p=50%)

Bull/Bear spread: +17% / -9%

Vs latest close: Bull +17% · Base +9% · Bear -9%

Scenario probabilities

Bull Target: $360 (p=25%)Base Target: $335 (p=50%)Bear Target: $280 (p=25%)

Commentary

Headline buzz is high because this was a T+3 post-earnings follow-up. Tone is mixed rather than decisively bullish: primary materials showed a real beat and a raised EPS outlook, while Reuters/Investing-style coverage and historical pricing around the event indicated investors still questioned guidance quality and near-term cash conversion. The peer frame has been tightened to named defense competitors from L3Harris' own 10-K, but we still did not verify a robust delayed analyst-revision set, so the absence of sell-side follow-through should be treated as an evidence gap, not positive confirmation.

As of 2026-05-03 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Q1 beat with EPS guide raise, but post-print digestion remains mixed
Backlog conversion and defense-demand alignment support medium-term upside if execution holds

Scenarios

Bull Target (Scenario probability)

$360 / p=25% prob

Base Target (Scenario probability)

$335 / p=50% prob

Bear Target (Scenario probability)

$280 / p=25% prob

Price $308 as of 2026-06-02

Nearest Scenario: Base (∆ 9%)

Targets vs latest close: Bull +17% · Base +9% · Bear -9%

Sentiment & Exposure

News Sentiment (30d)

0.10

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-07-30
Next earnings print must show cash-flow normalization
The main near-term check is whether stronger earnings translate into cash conversion: Q1 cash used in operations was $95M and free cash flow was negative $187M, with management citing timing of cash receipts and higher cash disbursements [#8-K-2026-04-30]. A clean reversal at the next quarterly report would likely matter more than another modest EPS guide tweak.
Prob 55.00% • Move -6.00% • Priced-in 45.00%

Short-term Catalysts

Next few weeks

Q1 beat with EPS guide raise, but post-print digestion remains mixed
2026-05-30
L3Harris reported Q1 revenue of $5.744B (+12%), GAAP EPS of $2.72 (+33%), record backlog of $40.7B on 1.4x book-to-bill, and raised 2026 EPS guidance to $11.40-$11.60 from $11.30-$11.50 [#8-K-2026-04-30]. Reuters and other post-print coverage framed the results as a beat, but also noted guidance-related caution in the market reaction.
Prob 75% • Move 4% • Priced-in 70%

Long-term Catalysts

Months to a year

Backlog conversion and defense-demand alignment support medium-term upside if execution holds
2026-12-31
Management highlighted accelerating demand tied to critical defense missions, while segment commentary pointed to growth in classified and international ISR aircraft programs, night vision devices, software-defined resilient communications, Next Generation Jammer activity, and missile/munition production volume [#8-K-2026-04-30]. If the $40.7B backlog converts cleanly, LHX can support a steadier rerating over the next few quarters.
Prob 65% • Move 8% • Priced-in 55%

Risks

Immediate market reaction was mixed: results beat, but post-print coverage highlighted guidance concerns and the stock closed at $313.37 on May 1, 2026 versus $321.40 on April 29, 2026, a roughly 2.5% decline across the reaction window.
Management's own forward-looking disclosures still point to risk from U.S. government spending priorities, contract mix, supply-chain disruption, indebtedness, and tax-rate variability [#8-K-2026-04-30].
Q1 operating cash flow was negative $95M and free cash flow was negative $187M, so cash conversion is the clearest execution risk despite stronger earnings [#8-K-2026-04-30].
Strategic-action timing remains an execution variable, as the earnings release forward-looking section referenced divestiture timing and a planned public offering by Missile Solutions without giving a firm dated milestone [#8-K-2026-04-30].

Peers

Symbol	Summary
RTX	Direct defense operating comparator. L3Harris' 2025 10-K says it competes domestically and internationally against large defense companies including RTX, with competition based on technological capability, past performance, delivery schedules and cost-effectiveness [#10-K-2026-02-12]. This makes RTX a better benchmark than broad capital-goods peers for judging whether LHX's record backlog and defense electronics demand deserve a rerating.
NOC	Direct defense operating comparator. L3Harris identifies Northrop Grumman among principal large-defense competitors [#10-K-2026-02-12]. NOC is relevant for comparing classified, space, mission-systems and government-program execution, which are closer to LHX's Q1 growth drivers than generic industrial backlog comps.
LMT	Direct defense operating comparator. L3Harris names Lockheed Martin as a principal competitor [#10-K-2026-02-12]. LMT provides a more useful read-through for defense procurement, program timing and cash conversion than the packet's broader capital-goods candidate set.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Human targets: serper
Analysis date: 2026-05-03

AI Stock Memo: LHX - L3Harris - RankAlpha