L3Harris Technologies' (LHX) 2026 investment story centers on the planned second-half initial public offering of its newly created Missile Solutions business and about $1 billion investment commitment tied to the unit, which Morgan Stanley views as a potential positive, the brokerage said Monday.

The company is guiding to roughly 16% year-over-year growth at Missile Solutions in 2026 and expects durable double-digit annual growth over the following years. The growth is expected to be backed by multi-year procurement frameworks for key missile programs.

Outside of Missile Solutions, L3Harris' guidance implies solid mid-single-digit growth. This drives a peer-high organic topline growth outlook of about 7% for the company in 2026.

Morgan Stanley said L3Harris' Feb. 25 investor day represents a key catalyst where investors can expect additional details on the Missile Solutions IPO. It also anticipates a new multi-year financial framework, confirming that L3Harris will retain a controlling stake post-IPO.

The brokerage increased its 2026 topline estimate by roughly 1% to $23.36 billion. Earnings per share is now estimated at $11.45 from $11.55.

Morgan Stanley raised its price target on the stock to $390 from $367 and maintained an overweight rating, citing a favorable risk-reward profile following a Q4 earnings beat.

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