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L3Harris (LHX) Secures Modification Contract to Aid Submarines
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L3Harris Technologies, Inc. (LHX - Free Report) recently clinched a modification contract for providing in-service class submarines. Valued at $35.7 million, the award has been provided by the Naval Sea Systems Command, Washington, D.C.
Per the terms of the deal, L3Harris will procure production hardware and spare parts to support new construction and in-service class submarines. The contract is scheduled to be completed by July 2027, and the majority of the work related to the contract will be carried out in Northampton, MA.
What’s Favoring L3Harris?
Nations are strengthening their defense budget to upgrade and modernize their defense structure. Such increased investments have bolstered the expenditure on sea warfare capabilities like submarines. In the days ahead, this may significantly increase as submarines play an integral role in sea warships.
Per the report from the Mordor Intelligence firm, the submarine market is poised to witness a CAGR of 4% over the 2023-2028 period. Such growth prospects are likely to benefit L3Harris, with the company being the world’s largest submarine imaging system provider with imaging masts on all classes of U.S. Navy submarines, delivering precise, high-resolution optics and integrated sensor packages. This may result in a steady flow of contracts for LHX, thus boosting its revenues.
Peer Prospects
Apart from L3Harris, defense majors that may benefit from the expanding submarine market are BAE Systems (BAESY - Free Report) , Huntington Ingalls Industries (HII - Free Report) and General Dynamics (GD - Free Report) , which have significant exposure in the submarine market.
General Dynamics’ Marine Systems segment is one of the two leading designers and builders of nuclear-powered submarines. The company is investing $1.8 billion of capital in expanded and modernized facilities at Electric Boat to support growth in submarine construction.
General Dynamics has a long-term earnings growth rate of 8.9%. Its investors have gained 7.4% in the past three months.
BAE Systems’ Astute class is the largest and most advanced attack submarine for the U.K. Royal Navy. Equipped with world-leading sensors, the Astute class carries both Tomahawk Land Attack Cruise Missiles and Spearfish Heavyweight Torpedoes.
The Zacks Consensus Estimate for BAE Systems’ 2023 sales suggests a growth rate of 15.7% from the prior-year reported figure. Its shares have rallied 43.5% in the past year.
Huntington Ingalls’ Newport News Shipbuilding (“NNS”) is one of the two designers and builders of nuclear-powered submarines for the U.S. Navy. It provides fleet services to submarines worldwide, offering modernization, repair and installation services. NNS is a major shipbuilding partner in the Columbia-class program and the Virginia-class submarine program.
The Zacks Consensus Estimate for Huntington’s 2023 earnings suggests a growth rate of 0.3% from the prior-year reported figure. The consensus estimate for HII’s 2023 sales indicates a growth rate of 3.5% from the prior-year reported figure.
Price Movement
In the past three months, shares of L3Harris have decreased 3.9% compared with the industry’s 2.2% decline.
Image: Bigstock
L3Harris (LHX) Secures Modification Contract to Aid Submarines
L3Harris Technologies, Inc. (LHX - Free Report) recently clinched a modification contract for providing in-service class submarines. Valued at $35.7 million, the award has been provided by the Naval Sea Systems Command, Washington, D.C.
Per the terms of the deal, L3Harris will procure production hardware and spare parts to support new construction and in-service class submarines. The contract is scheduled to be completed by July 2027, and the majority of the work related to the contract will be carried out in Northampton, MA.
What’s Favoring L3Harris?
Nations are strengthening their defense budget to upgrade and modernize their defense structure. Such increased investments have bolstered the expenditure on sea warfare capabilities like submarines. In the days ahead, this may significantly increase as submarines play an integral role in sea warships.
Per the report from the Mordor Intelligence firm, the submarine market is poised to witness a CAGR of 4% over the 2023-2028 period. Such growth prospects are likely to benefit L3Harris, with the company being the world’s largest submarine imaging system provider with imaging masts on all classes of U.S. Navy submarines, delivering precise, high-resolution optics and integrated sensor packages. This may result in a steady flow of contracts for LHX, thus boosting its revenues.
Peer Prospects
Apart from L3Harris, defense majors that may benefit from the expanding submarine market are BAE Systems (BAESY - Free Report) , Huntington Ingalls Industries (HII - Free Report) and General Dynamics (GD - Free Report) , which have significant exposure in the submarine market.
General Dynamics’ Marine Systems segment is one of the two leading designers and builders of nuclear-powered submarines. The company is investing $1.8 billion of capital in expanded and modernized facilities at Electric Boat to support growth in submarine construction.
General Dynamics has a long-term earnings growth rate of 8.9%. Its investors have gained 7.4% in the past three months.
BAE Systems’ Astute class is the largest and most advanced attack submarine for the U.K. Royal Navy. Equipped with world-leading sensors, the Astute class carries both Tomahawk Land Attack Cruise Missiles and Spearfish Heavyweight Torpedoes.
The Zacks Consensus Estimate for BAE Systems’ 2023 sales suggests a growth rate of 15.7% from the prior-year reported figure. Its shares have rallied 43.5% in the past year.
Huntington Ingalls’ Newport News Shipbuilding (“NNS”) is one of the two designers and builders of nuclear-powered submarines for the U.S. Navy. It provides fleet services to submarines worldwide, offering modernization, repair and installation services. NNS is a major shipbuilding partner in the Columbia-class program and the Virginia-class submarine program.
The Zacks Consensus Estimate for Huntington’s 2023 earnings suggests a growth rate of 0.3% from the prior-year reported figure. The consensus estimate for HII’s 2023 sales indicates a growth rate of 3.5% from the prior-year reported figure.
Price Movement
In the past three months, shares of L3Harris have decreased 3.9% compared with the industry’s 2.2% decline.
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.