Can L3Harris' Strategic Investment Strengthen Missile Solutions?

L3Harris Technologies, Inc. LHX is creating a new financial and operating framework around its Missile Solutions business through a strategic investment involving the U.S. Department of War. In April 2026, L3Harris entered into an agreement, under which its wholly owned subsidiary, Aerojet Rocketdyne Holdings, Inc., issued preferred stock and warrants for an aggregate purchase price of $1 billion. The transaction is intended to provide additional funding for the expansion and modernization of the Missile Solutions business.

The proceeds are specifically directed toward expanding missile manufacturing capacity and capabilities. L3Harris received net proceeds of $973 million, which are to fund development and construction activities related to manufacturing expansion within the Missile Solutions segment. The investment is tied directly to increasing production capabilities rather than being used solely for general corporate purposes.

The agreement also establishes AXYV Inc., a newly formed wholly owned subsidiary, as part of the potential future structure of the business. If a Qualified Initial Public Offering is completed on or before Dec. 31, 2027, the preferred stock is expected to convert into AXYV common stock. L3Harris has stated that it expects to use commercially reasonable efforts to complete the offering, subject to specified contractual milestones.

This structure could give the Missile Solutions business a dedicated path for additional capital and expansion while creating a potential public-market framework for AXYV. With funding earmarked for manufacturing development and construction, the arrangement provides a mechanism to increase production capacity for critical missile technologies while supporting the longer-term evolution of the business.

Companies Expanding Missile Manufacturing Capacity

Growing demand for advanced missile systems is encouraging aerospace and defense companies to expand their missile manufacturing capabilities. Northrop Grumman Corporation NOC and RTX Corporation RTX are investing in production infrastructure and manufacturing capacity to support rising demand.

Northrop Grumman is expanding its missile manufacturing capabilities by investing in production facilities, equipment and infrastructure to increase capacity and meet growing customer demand.

RTX is strengthening missile manufacturing through capacity expansions and infrastructure upgrades across its Raytheon business, aiming to increase output, improve production efficiency and meet rising demand for advanced missile systems.

Earnings Estimates for LHX

The Zacks Consensus Estimate for 2026 and 2027 earnings per share suggests year-over-year growth of 9.41% and 14.80%, respectively.

Image Source: Zacks Investment Research

LHX Stock Is Trading at a Discount

LHX is trading at a discount relative to the industry, with a forward 12-month price-to-sales of 1.97X compared with the industry average of 2.38X.

Image Source: Zacks Investment Research

LHX Stock Price Performance

Over the past year, LHX shares have fallen 4.3% compared with the industry’s 7.6% decline.

Image Source: Zacks Investment Research

LHX’s Zacks Rank

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

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research