Defense stocks were in focus Tuesday as L3Harris Technologies secured a major new contract and UBS upgraded Lockheed Martin on strong missile and sustainment growth prospects. Neither development directly involves the cryptocurrency market, but both highlight significant institutional and industrial activity in the defense sector.
L3Harris Technologies received a $4.7 billion, seven-year contract from Lockheed Martin to produce propulsion systems for the PAC-3 Missile Segment Enhancement interceptor. The award is the largest PAC-3 propulsion contract in L3Harris history and covers three key components: the advanced two-pulse solid rocket motor, the Lethality Enhancer, and the Attitude Control Motors. The contract is currently undefinitized, meaning final pricing and terms are still being worked out, and actual results depend on continued funding up to the full contract value.
L3Harris has been expanding production capacity to support the program, breaking ground in June on two new facilities at its Camden, Arkansas site that are expected to be operational in 2027. The company has built around 60 new facilities and added more than one million square feet of space across Alabama, Virginia, and Arkansas. Ken Bedingfield, President of Missile Solutions at L3Harris, said the award allows the company to keep expanding PAC-3 propulsion production capacity.
Institutional interest in LHX also surged. The California State Teachers Retirement System, CalSTRS, increased its position by 27,873% in Q2, now holding 83.76 million units valued at $24.34 billion, representing nearly 45% of the company. Overall, institutional investors own 84.76% of L3Harris. The stock opened at $256.45 on Tuesday, near its 52-week low of $256.05.
L3Harris also posted strong Q2 earnings, with EPS of $3.13 beating the $2.80 consensus and revenue of $5.88 billion rising 8.4% year over year. Full-year 2026 EPS guidance was set at $11.80 to $12.00. Despite the earnings beat, several analysts trimmed price targets: UBS cut from $312 to $298, Susquehanna lowered from $410 to $350, and BNP Paribas Exane dropped from $330 to $310. The consensus rating remains a Moderate Buy with an average price target of $360.45.
Separately, UBS upgraded Lockheed Martin from Neutral to Buy and raised its price target to $674 from $581. UBS analyst Gavin Parsons cited accelerating missile production, rising defense budgets, and revenue streams beyond the F-35. The bank projects revenue growth of roughly 9% annually through 2028 and sees the missiles and fire control division growing 150% between 2025 and 2030. Key programs include the PAC-3 interceptor, THAAD, Precision Strike Missile, and JASSM/LRASM. UBS also sees F-35 sustainment, the CH-53K heavy-lift helicopter, and the Trident fleet ballistic missile program as underappreciated growth contributors.
UBS forecasts Lockheed revenue of $81.05 billion in 2026, $88.48 billion in 2027, and $96.13 billion in 2028, with adjusted EPS of $30.69, $34.50, and $39.34 respectively. The bank views Lockheed's 15% discount to the S&P 500 as unjustified given the growth outlook. In a bull scenario, UBS sees the stock reaching $870, while its downside case puts the value at $452.
