L3Harris: As This Narrow Moat Contractor Takes on Rockets, Shares Trade Below Our $227 Fair Value

We are initiating coverage of L3Harris with a narrow moat rating and $227 per share fair value estimate. The firm has completed the acquisition of ViaSat's data link networking business, as well as the more transformative Aerojet Rocketdyne, which supplies rocket motors and munitions to the defense and aerospace industry. The company's proprietary research and development and a stated pause in sizable acquisitions present the opportunity for it to achieve industry-leading operating margins, as it ingests those deals over time.