RTX Corporation Surges Ahead in Aerospace and Defense
With a market cap of $171.7 billion, RTX Corporation (RTX) stands out as a prominent player in the aerospace and defense sector, providing advanced systems and services to customers across commercial, military, and governmental spheres globally. The company’s innovations within Collins Aerospace, Pratt & Whitney, and Raytheon focus on aircraft engines, avionics, cybersecurity, and missile defense systems.
Strong Performance Outshines the Broader Market
Over the last 52 weeks, RTX’s shares have significantly outperformed the market. The company has seen a 42.4% increase, while the broader S&P 500 Index ($SPX) recorded a 23.3% gain. Year-to-date (YTD), RTX’s stock is up 11.5%, compared to the S&P 500’s modest rise of 3.2%.
Competitive Edge Over Industrial Peers
Drilling down further, RTX has surpassed the Industrial Select Sector SPDR Fund’s (XLI) nearly 22% return over the same 52-week period, and it has also outdone a 5.8% YTD gain.
Q4 Earnings Boosts Investor Confidence
On January 28, shares of RTX rose 2.6% following strong Q4 2024 earnings. The adjusted EPS of $1.54 not only beat estimates but also marked a 19.4% increase from the previous year. Total revenue reached $21.6 billion, an 8.5% year-over-year growth, thanks to increased sales across Pratt & Whitney, Raytheon, and Collins Aerospace. Demand for aircraft components and repair services remained high as airlines extended the life of older planes due to supply chain challenges. Moreover, RTX’s defense segment enjoyed a remarkable 36% profit boost from the growing demand for its Patriot missile systems utilized in ongoing conflicts.
Investor optimism was further fueled by RTX’s impressive backlog of $218 billion, alongside management’s reaffirmation of strong demand, despite slightly disappointing guidance for 2025.
Positive Forward Outlook
Looking ahead to the current fiscal year, which ends in December 2025, analysts estimate a 6.5% year-over-year growth in EPS, projected at $6.10. RTX has a history of exceeding earnings expectations, having topped consensus estimates for the last four quarters.
Analyst Ratings Point to a Bullish Outlook
Out of the 23 analysts covering RTX, the overall consensus rating is a “Moderate Buy.” This rating includes 10 “Strong Buy” recommendations, one “Moderate Buy,” 11 “Holds,” and one “Strong Sell.”
Notably, this outlook is more favorable compared to three months ago, which had only six “Strong Buy” ratings.
Price Targets Adjusted by Analysts
On January 30, Bernstein analysts increased their price target for RTX to $136 while keeping a Market Perform rating. They attributed this adjustment to solid Q4 results and improving long-term margins. Additionally, the growth in Maintenance, Repair, and Overhaul (MRO) capabilities, coupled with a stable aftermarket for V2500 and GTF engines, supports RTX’s financial prospects despite potential challenges with margins.
As of this writing, RTX shares are trading below the average price target of $135.86. The highest price target stands at $159, suggesting a possible upside of 23.3% from current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
More news from Barchart
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
