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Wednesday, Baird analyst Peter Arment upgraded RTX Corp. (NYSE: RTX) stock rating from Neutral to Outperform and increased the price target to $160 from the previous $136. The stock, currently trading at $132.69 and near its 52-week high of $135.36, has demonstrated impressive momentum with a 42.95% return over the past year. According to InvestingPro data, RTX maintains a strong market position with a market capitalization of $177.15 billion. Arment’s decision is based on the anticipation that headline risk associated with the company’s GTF engines will decrease significantly after 2025. This outlook is further supported by the expected multi-year global missile replenishment cycle and strong Department of Defense (DoD) budgets. The company’s stable position is reflected in its low volatility profile, with a beta of 0.49, making it an attractive option for investors seeking defensive stocks.
Arment highlighted the potential benefits RTX Corp. is poised to receive from substantial supplemental spending bills and the Golden Dome for America initiative. These government actions are expected to provide a significant boost to the company’s prospects. According to Arment, RTX will be a major beneficiary of these initiatives, which will likely contribute to the company’s financial performance and growth.
The upgrade reflects a positive view of RTX’s future cash flow. Arment used a free cash flow (FCF) yield of approximately 4% on the company’s 2026 estimates to determine the new price target. InvestingPro analysis shows RTX has maintained strong financial performance with 17.15% revenue growth and has consistently rewarded shareholders, maintaining dividend payments for 55 consecutive years with a current yield of 1.9%. This FCF yield remains unchanged from previous evaluations, but the analyst has extended the outlook period by an additional 12 months.
The new price target of $160 implies a significant increase in value for RTX Corp. stockholders if the company’s performance aligns with Baird’s expectations. The analyst’s optimistic forecast is based on the assumption that RTX will effectively navigate through the risks and leverage the upcoming opportunities in the defense sector.
Investors and market watchers will be monitoring RTX Corp.’s performance closely to see if it meets the upgraded expectations set forth by Baird. The company’s future dealings with the GTF engines, its role in the global missile replenishment cycle, and its ability to capitalize on increased defense budgets will be key factors in achieving the higher price target. For deeper insights into RTX’s valuation and growth prospects, investors can access comprehensive analysis and 12 additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Collins Aerospace, a unit of RTX, has started full production of its Mounted Assured Positioning, Navigation and Timing Generation II system (MAPS GEN II). This system will be integrated into U.S. Army and Marine Corps vehicles, providing advanced navigation solutions designed to resist interference. Additionally, Collins Aerospace has secured a contract to supply the U.S. Air Force with 144 ACES II ejection seats for the F-15EX aircraft, reflecting ongoing collaboration with Boeing (NYSE:BA) Defense.
Meanwhile, RTX’s subsidiary, Pratt & Whitney, has landed a $1.5 billion contract to support the F119 engines powering the U.S. Air Force’s F-22 Raptor fighter jets. This agreement aims to enhance engine readiness and reduce maintenance costs over a three-year period. In analyst updates, UBS has upgraded RTX Corp.’s stock rating from Neutral to Buy, raising the price target to $147 due to the company’s strong positioning and potential revenue growth from increased NATO defense spending.
However, the defense sector is facing challenges as reports of planned Pentagon budget cuts have emerged. The Trump administration has directed the Pentagon to prepare for significant reductions, raising concerns about future revenue streams for defense companies like RTX. These developments are being closely monitored by investors as they assess the potential impact on the company’s financial outlook.
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