L-3 Communications Hits 52-Week High On Rating Upgrade

Shares of L-3 Communications Holdings Inc. (NYSE:LLL) scaled a new 52-week high of $138.00 on May 19, before eventually closing a little lower at $136.85. With a market cap of around $10.53 billion, the company has seen its shares soar roughly 14.51% so far this year, outperforming the 0.19% loss of the S&P 500 over the same period.

What’s Driving Raytheon Up?

L-3 Communications’ rating was upgraded to “outperform” from “sector perform” by Robert Stallard, an equities research analyst at RBC Capital, as per a report released on Thursday. The target price was raised to $150 from the previous target of $137. The brokerage firm’s target price shows a potential increase of 9.61% from the current price of the stock.

After a discussion with the company’s management, Stallard believes that L-3 Communications is poised to achieve its long-term operating margin target and improved implementation. Moreover, he stated that the company’s latest initiatives related to the portfolio and balance sheet will allow it to deploy cash for mergers and acquisitions as well as for boosting investor value.

L-3 Communications’ CFO, Ralph D’Ambrosio stated that in 2017, Electronic Systems may touch the low end of the range of 13–14% of operating margin, while Aerospace Systems is expected to keep up its robust performance.

During the first quarter of 2016, L-3 Communications’ earnings and revenues beat Street expectations by 32.5% and 0.6%, respectively. Earnings also increased during the quarter driven mainly by stronger-than-expected margins at Aerospace.

The company is a pure-play provider of defense electronics and highly engineered products and services, and its strategy of gradually transforming its business portfolio to focus on defense electronics, communications and ISR markets will likely boost sales and margins, going forward.

The company currently has a Zacks Rank #3 (Hold).

Stocks to Consider

A few better-ranked stocks in the aerospace and defense space include Engility Holdings, Inc. (NYSE:EGL) , BAE Systems (LON:BAES) plc (OTC:BAESY) and CAE Inc. (TO:CAE) , each carrying a Zacks Rank #2 (Buy).


BAE SYSTEMS-ADR (BAESY): Free Stock Analysis Report

CAE INC (CAE): Free Stock Analysis Report

L-3 COMM HLDGS (LLL): Free Stock Analysis Report

ENGILITY HLDGS (EGL): Free Stock Analysis Report

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