Stock Analysis | L3Harris Outlook - Technical and Market Divergence Signals Weakness

1. Market Snapshot

Takeaway: L3Harris (LHX) is underperforming with a recent price drop of -2.70% despite mostly bullish analyst ratings. Our internal diagnostic score (0-10) for technical conditions is 2.14, suggesting investors should avoid the stock for now.

2. News Highlights

• May 29, 2025: Hanwha Aerospace builds defense plant in Germany – This highlights growing international interest in the defense sector, a potential tailwind for L3Harris, but it may also increase competition.
• May 30, 2025: Northrop Grumman invests $50M in Firefly Aerospace – The aerospace-defense space continues to attract big names and capital, reinforcing the sector's growth but not directly aiding L3Harris' near-term performance.
• May 30, 2025: Embraer opens Indian subsidiary – This signals global expansion in aerospace and defense, suggesting industry tailwinds—but again, L3Harris' technicals remain weak.

3. Analyst Views & Fundamentals

Analyst Consensus: There are 7 active institutions with a recent 20-day rating spread: Strong Buy (6), Buy (2), and Neutral (2). The simple average rating is 4.40, while the historical performance-weighted rating is 4.98. Despite the optimism, the ratings are not aligned—“There are differences”—and the current price trend of -2.70% doesn’t match the overall bullish outlook.

Key Fundamental Factors:

• Net cash flow from operating activities / Total liabilities: 2.72% — internal diagnostic score: 4.00
• EBIT / Total operating revenue: 12.17% — internal diagnostic score: 2.48
• Cash-UP: 21.996% — internal diagnostic score: 4.73
• Net income-Revenue: -9.34% — internal diagnostic score: 5.24
• Net cash flow from operating activities per share (YoY growth rate): -5.79% — internal diagnostic score: 3.00

4. Money-Flow Trends

Big-money and retail flows are both negative. The internal diagnostic score (0-10) for fund flow is 7.69, indicating good overall performance despite the negative trend. Here's the breakdown:

• Small_trend: Negative (inflow ratio 49.56%)
• Medium_trend: Negative (inflow ratio 49.04%)
• Large_trend: Negative (inflow ratio 49.00%)
• Extra-large_trend: Negative (inflow ratio 45.64%)

5. Key Technical Signals

Our internal diagnostic score (0-10) for L3Harris is 2.14, with 6 bearish indicators and 0 bullish ones.

Recent Technical Indicators (Scores & Dates):

• Marubozu White (3.40) – 2025-08-12 – Suggests a neutral to weak continuation
• Bearish Engulfing (2.82) – 2025-08-06 – A bearish reversal pattern
• WR Overbought (2.74) – 2025-08-05 – May signal weakness in the top
• MACD Death Cross (1.00) – 2025-08-07 – A strong bearish signal
• WR Oversold (1.00) – 2025-08-08 – Suggests further decline expected

Key Insight: The technical indicators show a weak state with bearish signals dominant (6 to 0). It is advised to avoid L3Harris at this time based on these signals.

6. Conclusion

Despite strong analyst sentiment and positive global aerospace news, L3Harris appears to be struggling on the technical front. With a low internal diagnostic score (2.14) and multiple bearish signals, the current trend is weak and likely to persist. Investors should consider waiting for a clearer reversal or improved technical setup before considering a long position in LHX.