On Tuesday, Bernstein analysts, led by Douglas Harned, maintained a Market Perform rating on RTX Corp (NYSE:RTX) with a steady price target of $131.00. The $161 billion aerospace giant, which InvestingPro analysis suggests is currently fairly valued, shows strong financial health with an overall score of 'GOOD'.
The analysts focused on the upcoming fourth-quarter report due January 28, emphasizing the significance of the company's guidance for 2025, particularly in terms of business segment growth, margins, and overall free cash flow performance.
The analysts expect that the investor community will continue to pay close attention to RTX Corp's geared turbofan (GTF) engines and powdered metal products. However, they noted that these aspects are relatively minor components of the company's broader narrative.
With impressive revenue growth of 17.8% in the last twelve months and a healthy EBITDA of $12.6 billion, RTX Corp demonstrates strong operational performance. Looking beyond the 2025 guidance, Bernstein analysts believe that more critical factors for Raytheon (NYSE:RTN)'s growth prospects include the scale and timing of expansion in tactical missiles and missile defense systems.
This growth is contingent on the timing of demand and the ability to navigate the supply chain effectively.Want deeper insights? InvestingPro subscribers have access to over 10 additional exclusive ProTips and comprehensive financial analysis for RTX Corp.
Additionally, the ability of Raytheon to overcome recent margin pressures in fixed-price programs is seen as a pivotal element for the company's financial health. For Pratt, a subsidiary of RTX Corp, the resolution of long-term issues surrounding the GTF engines, such as the Advantage program, is of particular interest, along with the trajectory of aftermarket work growth.
At Collins, another subsidiary of RTX Corp, the focus is expected to be on margin impact, which includes the recovery of original equipment (OE) production at major aerospace manufacturers Boeing (NYSE:BA) and Airbus, as well as the extent of aftermarket growth.
The analysts' commentary indicates that these areas will be crucial for investors to monitor as they assess the company's future performance and financial stability.
In other recent news, RTX Corp reported a robust third-quarter performance, with an adjusted earnings per share of $1.45 and an 8% increase in organic revenue.
The company also revised its 2024 adjusted EPS guidance to a range of $5.50 to $5.58. Meanwhile, Citi analyst Jason Gursky upgraded RTX Corp's stock rating from Neutral to Buy, reflecting confidence in the company's revenue and cash flow growth. Gursky also projected that RTX Corp could generate about $10 billion in free cash flow by 2027.
RTX Corp has also secured multiple defense contracts, including a $529 million contract to supply the Netherlands with a Patriot air and missile defense system fire unit, a $333 million contract from the U.S. Navy for the production of Standard Missile-6 (SM-6) Block IA, and a $946 million contract to deliver additional Patriot air and missile defense systems to Romania.
In spite of these successes, Wizz Air, a client of Pratt & Whitney, a division of RTX Corp, has expressed concerns over ongoing issues with Pratt & Whitney engines, which are expected to persist for four to five years.
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