Shares of aerospace and defense company L3harris Technologies (NYSE:LHX) have jumped by nearly 9.5% over the past month. However, it seems like more gains could be in the cards after the company’s latest strategy update. LHX plans to discontinue all M&A activity for the foreseeable future to focus on fortifying its balance sheet and returning excess funds to investors. Further, it plans to boost productivity, lower expenses, and improve margins.
The company also outlined its financial objectives for the medium term. It aims to generate $23 billion in revenue and $2.8 billion of free cash flow through 2026. Over the next three years, LHX plans to invest in its business and lower debt to reach a leverage ratio of 3x.
Further, LHX is reviewing its operational performance, cost structure, and portfolio to find potential avenues for value creation. The review is expected to be completed in 2024. Importantly, LHX aims to position itself as a company focusing on national security and technology.
With this goal in mind, LHX has divested its Commercial Aviation Solutions Business for $800 million and brought in Ken Bedingfield as its new CFO. Earlier, it acquired Aerojet Rocketdyne for $4.7 billion.
Is L3Harris a Good Buy?
This slew of positives has propelled LHX shares to their highest level in nearly four months. Overall, the Street has a Moderate Buy consensus rating on L3Harris Technologies, and the average LHX price target of $209.43 implies a modest 4.55% potential upside in the stock.
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