On Thursday, Jefferies maintained its Hold rating on RTX Corp. (NYSE:RTX), with a steady price target of $120.00, following the company's third-quarter performance. RTX Corp. reported an adjusted earnings per share (EPS) of $1.45, surpassing both the estimated and consensus figures of $1.24 and $1.34, respectively.
The company's revenue increased by 8% organically and was 2% higher than anticipated. Adjusted segment income exceeded expectations by $0.10 and consensus by $0.02, with Below-The-Line (BTL) contributions adding $0.08 to the earnings.
RTX Corp. has raised its 2024 revenue guidance by 0.5% and its adjusted EPS guidance by 3% or $0.14, setting the new range at $5.50 to $5.58, up from the previous range of $5.35 to $5.45. This updated guidance is compared to the analyst's estimates and consensus of $5.35 and $5.47, respectively. The 2024 sales forecast now stands at approximately $79.25 to $79.75 billion, a slight increase from the earlier projection of $78.75 to $79.5 billion.
The company's Pratt and Raytheon (NYSE:RTN) segments have seen a boost in their EBIT forecasts by $0.08, while the Collins segment's profit guidance has been reduced by $0.05. The addition of BTL is expected to contribute $0.09 to the 2024 earnings. RTX Corp.'s free cash flow (FCF) projection remains unchanged at $4.7 billion.
In more detailed segment performance, Collins' profit guidance has been adjusted to a range of $575 to $650 million, down from the initial forecast of $650 to $725 million, suggesting a midpoint margin of 15.9%. Pratt & Whitney's (P&W) EBIT growth forecast has been increased to $475 to $525 million from $400 to $475 million, indicating a midpoint margin of 8.0%. Raytheon's margin projections are implied at 10.1%, with an EBIT growth of $200 to $250 million.
Additionally, RTX Corp. has lowered its tax rate forecast to 18.8% from 19.3% and its interest expense projection to $1.935 billion from $1.975 billion. The FAS/CAS adjustment is now expected to be around $840 million, up from the previous $800 million.
In other recent news, RTX Corp. has secured contracts totaling $676 million for the continued production of the TOW weapon system for the U.S. Army. This includes a $430 million agreement for 2023 and an additional award of $246 million for 2024. The company has also reported strong third-quarter earnings, with an adjusted earnings per share (EPS) of $1.45, approximately 8% higher than consensus estimates. This led to an upward adjustment of the full-year 2024 EPS guidance to $5.54.
Several analysts have responded positively to these developments. TD Cowen maintained a Buy rating on RTX Corp. shares, citing strong defense orders and a promising book-to-bill ratio. Susquehanna reaffirmed its Positive rating and increased the price target to $150.00, while RBC Capital Markets adjusted its price target for RTX Corp. to $130.00. UBS also raised its price target for RTX Corp. to $133.00, acknowledging robust growth in the military sector.
However, Goldman Sachs maintained a Neutral rating, expressing concerns over the Collins division's margin, defense market exposure, and uncertainties surrounding the Geared Turbofan engine.
Despite these concerns, RTX Corp.'s strong quarterly results have been attributed to robust demand in both the commercial original equipment manufacturer (OEM) and aftermarket sectors, as well as in the Defense sector.
The company's backlog has also seen significant growth, now standing at $221 billion, indicating a promising outlook for its sustained growth in earnings and free cash flow.
InvestingPro Insights
RTX Corp.'s recent performance and updated guidance align with several key insights from InvestingPro. The company's revenue growth of 17.82% over the last twelve months, coupled with a significant 49.21% quarterly revenue growth, supports the raised 2024 revenue guidance mentioned in the article.
Two relevant InvestingPro Tips highlight RTX's financial strength: "Net income is expected to grow this year" and "Analysts predict the company will be profitable this year." These tips corroborate the company's increased adjusted EPS guidance for 2024.
Additionally, RTX's market position is reinforced by the InvestingPro Tip stating it's a "Prominent player in the Aerospace & Defense industry." This status is reflected in the strong performance across its Pratt and Raytheon segments, as noted in the article.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for RTX Corp., providing a deeper understanding of the company's financial health and market position.
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