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Can L3Harris' PAC-3 Award Boost Its Missile Business Growth?
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Key Takeaways
LHX secures its largest PAC-3 propulsion contract to date, covering key interceptor components.
LHX is expanding PAC-3 MSE manufacturing capacity with two new Camden facilities expected in 2027.
LHX's Missile Solutions revenues rose 14%, while its contractual backlog reached $10.5B.
L3Harris Technologies, Inc. (LHX - Free Report) is expanding its position in missile defense propulsion following a new $4.7 billion contract from Lockheed Martin. Announced on Sept. 8, 2026, the seven-year undefinitized contract award covers propulsion systems for the PAC-3 Missile Segment Enhancement (“MSE”) interceptor. The award is L3Harris’ largest PAC-3 propulsion contract to date and provides visibility into production activity.
The contract covers production of the PAC-3 MSE’s two-pulse solid rocket motor, Lethality Enhancer and Attitude Control Motors. These propulsion components support the interceptor and could sustain production as demand for missile-defense capabilities increases. The agreement builds on the procurement framework established among L3Harris, the Department of War and Lockheed Martin.
L3Harris is increasing its manufacturing capacity to support higher PAC-3 MSE volumes. The company broke ground in June on two new facilities at its Camden, AR, site, with both expected to become operational in 2027. The facilities are designed to increase production, improve throughput and modernize solid rocket motor manufacturing. These investments could help L3Harris accommodate higher demand.
The PAC-3 award adds to the momentum in L3Harris’ Missile Solutions business. Second-quarter revenues increased 14% year over year to $1.05 billion, driven by higher Propulsion Systems production and development volumes across missile and munitions programs. The segment ended the quarter with $10.5 billion in the contractual backlog, providing a base of future work. The new PAC-3 award could strengthen long-term revenue visibility as the company expands its production footprint.
Companies Expanding Missile Defense Production
Rising demand for missile-defense capabilities is encouraging defense contractors to increase production of interceptors, propulsion systems and related technologies. Lockheed Martin Corporation (LMT - Free Report) and RTX Corporation (RTX - Free Report) are two major U.S. defense companies positioned across the missile-defense supply chain.
Lockheed Martin is the prime contractor for the PAC-3 MSE interceptor, directly benefiting from higher production of the system supported by L3Harris’ propulsion award. This creates growth opportunities across both the interceptor and propulsion supply chains.
RTX develops missile-defense systems and interceptors for the Patriot air-defense architecture. Its exposure to these programs provides an avenue to benefit from continued investment in expanding U.S. air- and missile-defense capabilities.
Earnings Estimates for LHX
The Zacks Consensus Estimate for 2026 and 2027 earnings per share suggests year-over-year growth of 9.79% and 14.44%, 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 1.93X compared with the industry average of 2.36X.
Image Source: Zacks Investment Research
LHX Stock Price Performance
Over the past year, LHX shares have fallen 7.2% compared with the industry’s 7.7% decline.
View the Zacks #1 Rank List
Image: Bigstock
Can L3Harris' PAC-3 Award Boost Its Missile Business Growth?
Key Takeaways
L3Harris Technologies, Inc. (LHX - Free Report) is expanding its position in missile defense propulsion following a new $4.7 billion contract from Lockheed Martin. Announced on Sept. 8, 2026, the seven-year undefinitized contract award covers propulsion systems for the PAC-3 Missile Segment Enhancement (“MSE”) interceptor. The award is L3Harris’ largest PAC-3 propulsion contract to date and provides visibility into production activity.
The contract covers production of the PAC-3 MSE’s two-pulse solid rocket motor, Lethality Enhancer and Attitude Control Motors. These propulsion components support the interceptor and could sustain production as demand for missile-defense capabilities increases. The agreement builds on the procurement framework established among L3Harris, the Department of War and Lockheed Martin.
L3Harris is increasing its manufacturing capacity to support higher PAC-3 MSE volumes. The company broke ground in June on two new facilities at its Camden, AR, site, with both expected to become operational in 2027. The facilities are designed to increase production, improve throughput and modernize solid rocket motor manufacturing. These investments could help L3Harris accommodate higher demand.
The PAC-3 award adds to the momentum in L3Harris’ Missile Solutions business. Second-quarter revenues increased 14% year over year to $1.05 billion, driven by higher Propulsion Systems production and development volumes across missile and munitions programs. The segment ended the quarter with $10.5 billion in the contractual backlog, providing a base of future work. The new PAC-3 award could strengthen long-term revenue visibility as the company expands its production footprint.
Companies Expanding Missile Defense Production
Rising demand for missile-defense capabilities is encouraging defense contractors to increase production of interceptors, propulsion systems and related technologies. Lockheed Martin Corporation (LMT - Free Report) and RTX Corporation (RTX - Free Report) are two major U.S. defense companies positioned across the missile-defense supply chain.
Lockheed Martin is the prime contractor for the PAC-3 MSE interceptor, directly benefiting from higher production of the system supported by L3Harris’ propulsion award. This creates growth opportunities across both the interceptor and propulsion supply chains.
RTX develops missile-defense systems and interceptors for the Patriot air-defense architecture. Its exposure to these programs provides an avenue to benefit from continued investment in expanding U.S. air- and missile-defense capabilities.
Earnings Estimates for LHX
The Zacks Consensus Estimate for 2026 and 2027 earnings per share suggests year-over-year growth of 9.79% and 14.44%, 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 1.93X compared with the industry average of 2.36X.
Image Source: Zacks Investment Research
LHX Stock Price Performance
Over the past year, LHX shares have fallen 7.2% compared with the industry’s 7.7% 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.