L3Harris Taps JPMorgan, Morgan Stanley for Axyv Missile IPO

L3Harris Technologies (LHX) picked JPMorgan Chase and Morgan Stanley to lead the planned initial public offering of its Axyv missile systems business, a deal that could raise as much as $2 billion, people familiar with the matter told Bloomberg. The two banks will serve as joint bookrunners.

The selection puts JPMorgan and Morgan Stanley at the center of one of the year's most anticipated defense-sector listings. Axyv makes precision-guided missiles and launchers. The spin-off is meant to unlock value in a unit that has grown faster than L3Harris's other segments, the people said. L3Harris shares have underperformed the broader market in 2025. A standalone Axyv could attract a higher valuation multiple.

For the banks, the mandate adds to a growing pipeline of large-cap industrial IPOs. JPMorgan carries an AlphaScala Score of 60 (Moderate). Morgan Stanley scores 64 (Moderate). L3Harris itself scores 47 (Mixed). The fee pool on a $2 billion deal typically runs in the $60 million to $80 million range, split between the lead underwriters and other syndicate members. Both banks have been jockeying for position in the defense IPO space. QinetiQ's U.S. listing earlier this year was led by Goldman Sachs and Bank of America.

The Axyv unit reported roughly $1.5 billion in revenue last year, with operating margins near 20%, according to one person familiar. That margin profile is higher than L3Harris's corporate average of about 15%, which partly explains the decision to spin it off. The missile business benefits from multiyear Pentagon contracts and a backlog stretched by the war in Ukraine. Demand for precision-strike munitions has surged since 2022. That tailwind is expected to persist even as overall U.S. defense spending plateaus.

The read-through for other defense contractors is mixed. Companies with similar high-growth, high-margin units – like RTX's missile segment or Northrop Grumman's advanced weapons division – could face pressure to pursue similar spin-offs if the Axyv IPO succeeds. Pressure is not guarantee. Structural carve-outs carry execution risk and tax complications. The sector overall has been a laggard in 2025. The S&P Aerospace & Defense index is up roughly 5% year-to-date, trailing the S&P 500's 8% gain.

Investors will watch the next few quarters for comparable moves. The success of the Axyv offering will depend on the broader equity market's appetite for defense names and on the valuations assigned to comparable pure-play missile makers. Publicly traded peers like Kratos Defense & Security Solutions trade at 2.5 times forward sales. Larger primes like RTX trade at 2.0 times. Axyv would need to price somewhere in that range to clear.

JPMorgan shares rose 3.83% to $331.63 on the session. Morgan Stanley shares also gained, though by a smaller margin. L3Harris did not trade unusually, ending the day up 0.2%. A timetable for the offering has not been set.