Harris proves analysts wrong

On Tuesday I wrote that several analysts had downgraded Harris because they believed weakness in the company’s tactical radio business would cause the firm to miss earnings estimates and lower guidance.

Turns out these guys were way off and Harris easily beat earnings estimates and also boosted the low end of their full-year earnings forecast. The raised outlook was a very significant upside surprise relative to expectations.

Revenues for the quarter rose 4% to $1.29 billion, compared with the average estimate of $1.21 billion. Orders rebounded significantly in all three businesses and, more importantly, the steep fall-of in orders expected in the high-margin tactical radio unit (RF Communications) did not materialize.

Management said increasing U.S. troop levels in Afghanistan provided RF Communications with the most significant boost in orders across all of Harris’ business segments. This is somewhat ironic because increasing troop levels in Afghanistan was the main reason multiple analysts lowered future revenue forecasts for Harris’ tactical radios.
HRS shares finished the day +12.14%

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Peter J. Lazaroff, Investment Analyst