Stock Analysis | L3Harris Outlook - A Weak Technical Picture Amid Strong Analyst Optimism

Market Snapshot

L3Harris (LHX) has fallen 1.68% recently, despite a strong consensus of 6 “Strong Buy” ratings from analysts. The stock faces a mixed market sentiment, where optimism clashes with weak technical signals.

News Highlights

• Defense Spending on the Rise: In May 2025, the U.S. government proposed a 13% increase in defense spending to $1.01 trillion for FY 2026. This creates favorable conditions for aerospace and defense firms like L3Harris.
• Strategic Defense Partnerships: Danish Aerospace Company A/S and NECAS A/S recently formed a strategic partnership to boost Danish defense and space technology. This highlights growing international interest in defense sectors, potentially benefiting L3Harris through global demand.
• Industry Investments: Northrop Grumman recently invested $50 million in Firefly Aerospace, a space startup, emphasizing the trend of major aerospace firms expanding their space technology footprint. L3Harris, with its broad portfolio, is well-positioned to benefit from such industry momentum.

Analyst Views & Fundamentals

Analysts show a strongly optimistic outlook, with a simple average rating of 4.40 and a performance-weighted rating of 4.98. However, ratings are not consistent—there are six "Strong Buy" ratings, two "Buy" ratings, and two "Neutral" ratings, indicating disparity in expectations. This mixed sentiment contrasts with the stock's recent price decline.

Key fundamental factor values and their model scores:

• Price-to-Sales (PS) Ratio: 5.64 (Model score: 2.00)
• Inventory Turnover Ratio: 6.08 (Model score: 1.00)
• Net Cash Flow from Operating Activities / Operating Revenue (%): 5.66% (Model score: 3.00)
• Net Income / Revenue: -9.33% (Model score: 3.00)
• Return on Assets (ROA): 1.11% (Model score: 2.00)
• Cash-UP: 22.10% (Model score: 3.00)
• Net Cash Flow from Operating Activities / Total Liabilities (%): 2.72% (Model score: 3.00)
• Cash Flow from Operating Activities (CFOA): 1.55% (Model score: 3.00)
• EBIT / Total Operating Revenue (%): 12.17% (Model score: 1.00)
• Current Ratio: 1.04 (Model score: 0.00)

While the fundamentals show mixed signals, the internal diagnostic score of 6.64 suggests moderate strength. However, the recent negative price trend appears to clash with the strong analyst expectations.

Money-Flow Trends

Big money is currently flowing out of L3Harris, with negative overall trends in all investor categories. The inflow ratios for small, medium, large, and extra-large investors all hover around 48-49%, indicating significant outflows from all segments.

Specific flow patterns:

• Small investor trend: Negative
• Medium investor trend: Negative
• Large investor trend: Negative
• Extra-large investor trend: Negative

Despite these outflows, L3Harris has a fund-flow score of 7.75, suggesting that while the trend is negative, the magnitude of outflows is not extreme.

Key Technical Signals

The technical outlook for L3Harris is weak, with 6 bearish indicators and no bullish ones active over the past five days. Here's how the key signals look:

• RSI Overbought: Internal diagnostic score 1.88
• WR Oversold: Internal diagnostic score 1.00
• MACD Death Cross: Internal diagnostic score 1.00
• Marubozu White: Internal diagnostic score 3.38
• Bearish Engulfing: Internal diagnostic score 2.82
• WR Overbought: Internal diagnostic score 2.63

Recent chart patterns:

• 2025-08-12: Marubozu White (neutral to bearish pattern)
• 2025-08-06: Bearish Engulfing (bearish reversal pattern)
• 2025-08-05: WR Overbought and RSI Overbought (overbought conditions)
• 2025-08-08: WR Oversold (weak price momentum)
• 2025-08-07: MACD Death Cross (bearish momentum shift)

Overall, the technical score is 2.12, and the trend is clearly bearish. The market is in a weak state with strong risk of a downward move.

Conclusion

While analysts remain optimistic and fundamentals show moderate strength, the technical picture is very weak, with a high concentration of bearish signals. The stock is experiencing outflows across all investor categories, and the recent price decline does not match the strong analyst expectations.

Actionable takeaway: Given the low technical score and bearish momentum, investors should consider waiting for a pull-back before entering new positions. Monitor upcoming earnings or broader market trends for potential catalysts that might align the technical and fundamental signals.