11:03 AM EDT, 08/14/2024 (MT Newswires) -- L3Harris Technologies ( LHX ) is likely to face slower organic growth compared with its defense peers, RBC Capital Markets said in a note to clients on Wednesday.

The company may also see a "slow pace of margin improvement" as well as "limited upside relative to consensus," said RBC analysts including Ken Herbert.

The analysts said they believe the company will hit its target of $23 billion in revenue in 2026 and achieve free cash flow of $2.8 billion but organic growth in 2024 is only expected to be about 3% and about 4% in 2025, slower than the peer averages of about 5% and 4.3% growth, respectively.

"We also believe that while the pace of improvement on cost saving and margin expansion initiatives will continue, the potential upside from EACs is limited and upside to the pace of margin expansion is a risk," the analysts said.

RBC downgraded the stock rating to sector perform from outperform and lowered the company's price target to $240 from $250.

The analysts said that the stock has closed much of its "valuation disconnect" with its peers and that the near-term upside is now "reflected in the stock."

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