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While equity markets have staged a strong rebound from the April bottom, earnings estimates look to have just begun forming a bottom as the Q2 2025 earnings season unfolds. Meanwhile, L3Harris Technologies Inc. (LHX) delivered a triple play (beat, beat, raise) this quarter.

The question we ask ourselves every day is “What are we missing? Where is the puck going?” because that is where we want to be focused. Though we remain bullish on technology and the AI revolution, we are also always scanning the horizon for new opportunities.

In our previous bulletin, we highlighted the equity market price and fundamental resilience over the past 12 months amid significant structural changes, including shifts in monetary policy, political regimes, foreign trade policies, and a technological revolution. Shifting our focus to the latter half of 2025 and where equity prices could go, a key question emerges as to the trajectory of fundamentals: Have the downward revisions in S&P 500 EPS estimates reached a bottom, signaling the onset of stabilization, or even an upward inflection?

L3Harris Technologies Inc. (LHX)
 

At LHX, revenues were up 2% year-on-year (+6% organically), driven by higher volumes, new program ramps, and increased international demand. This looks to be the inflection point we’ve been waiting for.

The company is well ahead of its cost savings goals. There is strong demand across the portfolio. And management confirmed that negative Estimates At Completion (EACs) are through. Moreover, with increased international defense spending, the company is finding that it is replacing many indigenous players – a trend we expect will continue.

Recommended Action: Buy LHX.

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