L3Harris Receives $1B Deal, To Provide Communication Technology – November 26, 2024

L3Harris Technologies, Inc. (LHX Quick QuoteLHX – Free Report) clinched an indefinite delivery and quantity deal worth $999 million from the United States Navy to offer U.S. and coalition forces resilient communication technology. The contract extends the company’s previous 24 years of assistance, which provided a standard communication interoperability solution to the U.S. military forces and 57 partner nations.

L3Harris will provide its Multifunctional Information Distribution System Joint Tactical Radio System Terminals (MIDS JTRS) throughout the following five years.

What’s Favoring L3Harris?

Amid growing geopolitical tensions and warfare situations worldwide, military operations heavily rely on the ability to exchange accurate information across the battlefield safely and securely. As nations are boosting their defense budget. Modernizing and upgrading military radio communication systems constitute substantial part of defense budgets, leading to the increased procurement of advanced radio systems.

Per a report by Mordor Intelligence, the Military Communications market is projected to witness a CAGR of 5.9% during 2024-2029. Such a solid market prediction offers strong growth opportunities to L3Harris, which can deliver tactical communication services to counter new tactics and techniques adopted by enemies.

The company’s MIDS JTRS Software-Programmable Radio blends tomorrow’s network-centric communication capabilities with today’s real-time operating scenarios in a single unit. This four-channel software programmable radio supports Link 16 and the Tactical Air Navigation System, as well as three channels for future expansion. It also includes JTRS advanced networking waveforms that fulfill Joint Aerial Network – Tactical Edge specifications.

Meanwhile, the company’s product portfolio includes a wide variety of tactical radios, such as Tactical VHF/UHF Radios, Tactical Handheld Radios, Falcon Radio Product Line and Tactical Multiband Radios. Such significant products in its portfolio enable L3Harris to witness a stream of order flows. The latest contract win is a bright example of this.

Opportunities for Other Aerospace Defense Companies

Apart from L3Harris, defense contractors that are anticipated to benefit from the expanding Military Communication market spending are as follows:

Northrop Grumman (NOC Quick QuoteNOC – Free Report) : The company delivers secure, protected and survivable communications to help U.S. military services achieve information superiority. For safe, jam-resistant, tactical and strategic communications for military tactical and strategic forces, NOC’s Enhanced Polar System offers constant coverage in the polar zone, representing an evolution of requirements for protected, extremely high-frequency satellite communications in the North Polar Region.

Northrop has a long-term (three to five years) earnings growth rate of 19.1%. The Zacks Consensus Estimate for NOC’s 2024 sales suggests growth of 5.3% from the prior-year reported figure.

General Dynamics Corporation (GD Quick QuoteGD – Free Report) : This company is another notable provider of tactical communication systems. GD’s Digital Modular Radio (“DMR”) is the first software-defined radio to be adopted as a communication system standard by the U.S. military. It is one of the Navy’s most adaptable tactical radio systems that can support voice and data satellite communication networks. The DMR is currently deployed on 12 different U.S. ships and submarine platforms.

General Dynamics has a long-term earnings growth rate of 11.8%. The Zacks Consensus Estimate for GD’s 2024 sales implies growth of 13.6% from the prior-year reported figure.

BAE Systems (BAESY Quick QuoteBAESY – Free Report) : The company develops radio frequency communications, datalinks and flight control systems for the upcoming generation of military aircraft. Its Network Tactical Common Data Link enables the exchange of command-and-control information across separate or independent networks. It also allows the simultaneous transmission and reception of real-time intelligence, surveillance, and reconnaissance data from multiple sources by U.S. Navy personnel.

BAESY has a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for the company’s 2024 sales suggests growth of 37.7% from the prior-year reported figure.

Price Movement

In the past three months, shares of L3Harris have risen 6.3% against the industry’s decline of 9.3%.

Image Source: Zacks Investment Research

Zacks Rank

L3Harris currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.