Rtx Corp (NYSE:RTX) stock fell 0.11% (As on October 4, 11:23:43 AM UTC-4, Source: Google Finance) after Deutsche Bank adjusted its stance on the company, upgrading the stock from Sell to Hold, and increased the price target to $129 from $109. The shift in rating comes as the analyst anticipates third-quarter earnings per share (EPS) to surpass Wall Street expectations, and suggests that RTX Corp. can maintain its full-year guidance despite the impact of the Boeing strike, due to a less demanding second-half setup.
The analyst has also made slight adjustments to the EPS estimates for 2025 and 2026, taking into account a slower original equipment (OE) rate ramp at Boeing and Airbus. However, the impact of this slowdown is expected to be largely mitigated by a more favorable aftermarket mix. The upgrade to Hold reflects the analyst’s view that the market is increasingly recognizing RTX Corp. as a defense stock, which could potentially enable it to outperform other defense companies through actual operating leverage.
RTX Corp.’s current valuation is similar to that of pure defense companies, but with a more attractive long-term growth outlook given its aerospace exposure. The analyst believes this could lead to further upside for the stock. Despite the positive outlook, operational risks remain a concern, prompting the analyst to maintain a Hold rating rather than upgrading to Buy. The analyst notes that continued operational improvements are crucial for the company’s future performance.
Meanwhile, RTX reported second quarter sales of $19.7 billion, up 8 percent over the prior year. Adjusted net income of $1.9 billion was flat versus prior year as growth in adjusted segment operating profit was offset by higher interest and tax expenses, and lower pension income. Operating cash flow in the second quarter was $2.7 billion. Capital expenditures were $537 million, resulting in a free cash flow of $2.2 billion. Further, the Company has made progress in the quarter on resolving several outstanding legal matters which has resulted in an EPS charge of $0.68 associated with the expected resolution of these matters.
Moreover, Collins Aerospace had second quarter 2024 reported sales of $6,999 million, up 10 percent versus the prior year. Pratt & Whitney had second quarter 2024 reported sales of $6,802 million, up 19 percent versus the prior year. Raytheon had second quarter 2024 reported sales of $6,511 million, down 3 percent versus prior year as higher volume on land and air defense systems including Global Patriot, counter-UAS programs and Stinger was more than offset by the divestiture of the Cybersecurity, Intelligence and Services business completed in the first quarter of 2024.