L3Harris Technologies Secures Significant Multi-Year Javelin Propulsion Contract

Contract Award Details

L3Harris Technologies (LHX) has secured a significant multi-year contract, valued at up to $292 million, for the continued production of propulsion systems for the Javelin weapon system. Announced on September 15, 2025, this award represents the largest propulsion production agreement in the Javelin program's history, extending the production timeline by an additional five years. This agreement underscores L3Harris's critical role as the sole producer of Javelin solid rocket motors, a key component for the weapon system produced by a joint venture between Lockheed Martin and Raytheon.

The contract's five-year extension is expected to contribute approximately $58.4 million annually to L3Harris's revenue. This steady revenue stream enhances the company's long-term visibility within the defense sector.

Strategic Positioning and Market Impact

This substantial contract solidifies L3Harris's prominent position within the Aerospace & Defense industry. The company is actively bolstering its manufacturing capabilities through internal investments and a $215.6 million cooperative agreement with the Department of War. These initiatives are aimed at modernizing solid rocket motor manufacturing, incorporating advanced automation techniques, and implementing a fully digital workflow for Javelin production. This digital transformation is designed to enhance quality monitoring, enable real-time data tracking, and improve overall production efficiency.

L3Harris has diversified its portfolio across uncrewed aerial vehicles, sensors, avionics, space-based systems, missiles, and solid rocket motors, adapting civilian technologies for military applications. This strategic breadth, combined with its specialized capabilities, positions the company as a "Trusted Disruptor" in leveraging increased defense spending.

Financial Performance and Valuation

The Javelin contract contributes to L3Harris's robust financial profile. The company, with a market capitalization of approximately $52.6 billion, reported a revenue of $21.37 billion and a three-year revenue growth rate of 8.5%. Its operating margin stands at 11.07%, while the net margin is 7.94%, and the EBITDA margin is 17.7%.

Despite a declining gross margin over the past five years, L3Harris demonstrated strong performance in Q2 2025, with revenue reaching $5.4 billion, a 2% increase (6% organically). This led to an upward revision of its 2025 revenue forecast to $21.8–22.2 billion, with a target of $23 billion by 2026. The company also maintains a substantial backlog of $34.2 billion as of Q2 2025, reflecting a 3.6% year-over-year growth.

From a valuation perspective, L3Harris currently trades with a P/E ratio of 31.42, a P/S ratio of 2.49, and a P/B ratio of 2.73. These metrics are near historical highs, suggesting that the stock may be modestly valued. Analyst consensus indicates a "Buy" rating, with a target price of $300.6, implying potential upside. The company's shares have gained 24% in the past year, partly driven by new contract wins.

Broader Defense Sector Trends

The L3Harris contract underscores the sustained global demand for advanced defense systems, particularly amid prevailing geopolitical dynamics. The missile propulsion systems market is projected to grow at a Compound Annual Growth Rate (CAGR) of 7.2% between 2025 and 2032, driven by ongoing technological advancements, geopolitical considerations, and increasing global defense budgets. This growth trend creates a favorable operating environment for specialized component suppliers like L3Harris.

Increased defense spending, fueled by both geopolitical factors and new mandatory funding, provides tailwinds for defense contractors. Long-term, stable contracts such as this Javelin extension exemplify the industry's trend towards predictable revenue streams and enhanced stability for key suppliers.

Outlook and Future Initiatives

Looking ahead, L3Harris is focused on further expanding its production capacity and continuing its operational transformation. The company's LHX NeXt initiative aims to achieve $1.2 billion in cost savings by the end of 2025, building on $800 million already realized in 2024. These efforts are expected to continue driving margin expansion and reinforcing its position in critical defense areas.

The ongoing investments in modernized manufacturing and digital workflows are strategic steps to meet increasing demand and improve efficiency, ensuring L3Harris remains a key contributor to national and allied defense capabilities. The contract provides clear revenue visibility for the next half-decade, reinforcing investor confidence in the company's operational capabilities and strategic alignment with long-term defense priorities.