IMS has made significant alterations to its business operations that are prompting a revised financial outlook for the remainder of the year. These changes involve a strategic divestiture and an internal restructuring aimed at optimizing business performance.
The most notable update is the completion of the sale of the company's last remaining commercial aerospace segment. This transaction resulted in a substantial adjustment, with expected revenue for IMS decreasing by approximately $525 million. Consequently, this will also impact the company's anticipated profit margins adversely.
In addition to this divestiture, there has been a realignment within the company's business units. The FOS division has been moved from IMS to AR. This transfer is designed to enhance integration synergies and align the business more effectively with its core mission objectives. As a result of this internal shift, around $300 million in revenue is expected to transition from IMS to AR.
These strategic actions reflect IMS's ongoing efforts to streamline its operations and focus on areas with the highest potential for long-term growth and efficiency.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 20 analysts, the average target price for L3Harris Technologies Inc (LHX, Financial) is $255.09 with a high estimate of $324.00 and a low estimate of $212.00. The average target implies an upside of 17.93% from the current price of $216.31. More detailed estimate data can be found on the L3Harris Technologies Inc (LHX) Forecast page.
Based on the consensus recommendation from 24 brokerage firms, L3Harris Technologies Inc's (LHX, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for L3Harris Technologies Inc (LHX, Financial) in one year is $251.37, suggesting a upside of 16.21% from the current price of $216.31. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the L3Harris Technologies Inc (LHX) Summary page.
LHX Key Business Developments
Release Date: January 30, 2025
- Full Year 2024 Revenue: $21.3 billion, up 10% and 4% organically.
- Full Year 2024 Segment Operating Margin: 15.4%.
- Full Year 2024 Non-GAAP EPS: $13.10.
- Full Year 2024 Free Cash Flow: $2.3 billion, up 14%.
- Q4 2024 Revenue: $5.5 billion, up 4% organically.
- Q4 2024 Segment Operating Margin: 15.3%.
- Q4 2024 Non-GAAP EPS: $3.47.
- Q4 2024 Free Cash Flow: Over $1 billion.
- SAS Q4 2024 Revenue: $1.7 billion, down 4% year over year.
- SAS Q4 2024 Operating Margin: 10.8%.
- IMS Q4 2024 Revenue: $1.8 billion, up 9%.
- IMS Q4 2024 Operating Margin: 13.4%.
- CS Q4 2024 Revenue: $1.4 billion, up 5%.
- CS Q4 2024 Operating Margin: 24.4%.
- Aerojet Rocketdyne Q4 2024 Revenue Growth: 5%.
- Aerojet Rocketdyne Q4 2024 Operating Margin: 11.5%.
- 2025 Revenue Guidance: $21.8 billion to $22.2 billion, 4% organic growth at midpoint.
- 2025 Segment Operating Margin Guidance: Mid to high 15% range.
- 2025 Free Cash Flow Guidance: $2.4 billion to $2.5 billion.
- 2025 Non-GAAP EPS Guidance: $10.55 to $10.85, 10% growth at midpoint.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- L3Harris Technologies Inc (LHX, Financial) achieved a record backlog, positioning the company well for future growth.
- The company reported a 10% increase in revenue for 2024, reaching $21.3 billion, with a 4% organic growth.
- L3Harris Technologies Inc (LHX) successfully integrated Aerojet Rocketdyne and Tactical Data Link acquisitions, strengthening its portfolio.
- The company exceeded its cost savings target, achieving $800 million in 2024, and expects to reach $1.2 billion by the end of 2025.
- L3Harris Technologies Inc (LHX) won significant contracts, including a $1 billion IDIQ award for the US Navy and the next-gen jammer competition, enhancing its market position.
Negative Points
- The SAS segment experienced a 4% decline in revenue year-over-year, primarily due to the divestiture of the antenna business.
- Challenges were noted in some fixed-price development programs in the space sector, impacting margins.
- The company faces potential impacts from new executive orders and government contracting changes, which could affect Q1 2025 bookings and revenue.
- L3Harris Technologies Inc (LHX) reported negative EAC adjustments of approximately $100 million in 2024 due to issues in space programs.
- The divestiture of the commercial aviation solutions business is taking longer than expected, impacting revenue projections.
