L3Harris Technologies is caught in a sector-wide selloff, but the analyst community is adding its own pressure — with targets coming down just days before the next earnings print.
The stock fell nearly 4% on the week to close at $239.89, extending a month-long decline of just over 10%. That drop is broad-based: close peers RTX and LMT shed roughly 2% each on the week, NOC and GD fell 4% and 4.2% respectively, and HII lost 3%. The selling is sector-wide, not company-specific — but LHX is not outperforming the group either.
The Street's direction of travel is firmly toward lower targets. This week Bernstein's Douglas Harned — a bellwether voice on defense — trimmed his price objective to $346 from $365 while keeping his Outperform rating intact. Earlier in the month Guggenheim initiated with a Buy and a $365 target, a constructive entry that gives the bull case some fresh support. But the backdrop of cuts is hard to ignore: Jefferies stepped down to Hold in late August, UBS has lowered its target twice since May (now at $298), and BNP Paribas and Susquehanna both pulled targets lower after the July earnings miss. The consensus mean price target is $338.50 — implying roughly 41% upside from current levels — but that gap reflects how much the stock has de-rated rather than a consensus view that $340 is around the corner.
The July earnings print is the key backstory. LHX fell nearly 11% the day after reporting, and gave back another 6% over the following week. That single event accounts for a large portion of the year-to-date underperformance and explains why several firms have been resetting targets lower ever since. The next earnings event is scheduled for October 29 — six weeks out — and options positioning offers a useful read on sentiment heading in. The put/call ratio has moved notably more bullish than usual, dropping to 0.44, roughly 1.3 standard deviations below its 20-day average of 0.52. That is close to the lowest put/call reading of the past year (52-week low: 0.33), suggesting options buyers are reaching for calls rather than puts at this price level. Whether that reflects genuine conviction or simply a rebound trade after a 10% pullback is the open question.
Positioning in the lending market gives little cause for alarm. Short interest is running at just 2.2% of the free float — modest by any standard — and has actually declined about 2.6% on the week despite the price weakness. The borrow market is exceptionally loose: availability is near 9,999% (essentially uncapped), with over 148 million shares available to borrow relative to the roughly 4.1 million shares currently shorted. Cost to borrow has risen sharply in percentage terms — up 42% on the week and 55% over the past month — but remains negligible in absolute terms at 0.59%. There is no short squeeze dynamic here and no meaningful crowding on the short side.
On the fundamental scorecard, the valuation de-rating is real. The price-to-earnings multiple has contracted by roughly 2 points over the past 30 days to 18.2x, and the price-to-book ratio has fallen 0.2 points to 2.1x. The EV/EBITDA at 12.2x is also grinding lower. The bull case — raised revenue guidance, strong Aerojet segment performance, and free cash flow running above consensus — still holds in principle. The bear case centres on margin pressure in the SAS segment, budget timing risks, and softness in the Space division. The dividend factor score ranks in the 95th percentile, reflecting consistent payouts, though the most recent dividend data in the system is stale (last confirmed 2022). The short score of 31.9 has been essentially flat for two weeks, consistent with a stock where the pressure is fundamental rather than short-driven.
The October 29 print is therefore less about whether LHX can grow and more about whether management can demonstrate that the July miss was isolated — and whether margin trends in SAS and Space are stabilising heading into year-end.
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