Can LHX's Q3 2024 EPS growth sustain in Q4?

L3Harris Technologies' Q3 2024 EPS growth may not fully sustain in Q4 for several reasons:

1. Revenue Shortfall from Divestiture: The company recently divested its Commercial Aviation Solutions (CAS) segment, which was expected to generate approximately $600 million in sales for 2024. However, the divestiture created a revenue shortfall of around $480 million for 2025, which represents a 2% impact on the company’s revenue forecast. This reduction in revenue could potentially affect the EPS growth in Q4.
2. Strategic Priorities: The proceeds from the CAS divestiture are anticipated to be channeled towards accelerating share repurchase initiatives, with a target of $1 billion in buybacks for 2025. Such strategic priorities could impact the financials and potentially the EPS growth in Q4, as a portion of the earnings might be allocated towards buybacks rather than being fully reinvested in the business.
3. Market Sentiment and Analyst Ratings: Jefferies analyst Sheila Kahyaoglu adjusted the price target for L3Harris Technologies, lowering it to $250 from $260, while continuing to endorse the stock with a Buy rating. The lowered price target and the recent divestiture could influence market sentiment, which might affect the company's financial performance in Q4.
4. Historical Performance: Over the past three years, L3Harris Technologies experienced a decline in its share price, which dropped 18% despite a market return of about 25%. The company's EPS also declined at a compound rate of 4.5% per year over the same period. While the company has shown improvement in its bottom line recently, the sustainability of this trend in Q4 remains uncertain, especially considering the historical performance and market sentiment.

In conclusion, while L3Harris Technologies has shown improvement in its EPS growth recently, the factors mentioned above suggest that this growth may not fully sustain in Q4. The company's financial performance in Q4 will likely be influenced by the revenue shortfall from the divestiture, strategic priorities, market sentiment, and historical performance trends.