Bernstein maintains RTX Corp stock with $136 price target

On Thursday, Bernstein analysts maintained their Market Perform rating and $136.00 price target for RTX Corp (NYSE:RTX), which currently trades at $129.91. According to InvestingPro data, analyst targets range from $120 to $160, with the company’s next earnings report due in 5 days. The analysts highlighted the company’s first full 2025 guidance, which was provided during the Q4 earnings call in January. Based on InvestingPro’s Fair Value analysis, the stock appears to be fairly valued at current levels. Since then, they noted potential for Raytheon (NYSE:RTN)’s growth due to increased export demand and possible rises in the US budget. However, they also pointed out challenges for Pratt & Whitney and Collins, two of Raytheon’s subsidiaries, in the face of ongoing trade tensions that could lead to delivery delays for Boeing (NYSE:BA) and Airbus and higher costs.

The analysts discussed mixed prospects for Pratt & Whitney, citing possible margin expansion for Collins. They acknowledged that while the trade war might cause delivery delays for aerospace giants and increased costs for Collins and Pratt, the impact on production delays and the ability to pass these costs through remains uncertain. Bernstein’s estimates align with the Q1 revenue and EPS consensus, and for 2025, they expect a free cash flow (FCF) of $7.3 billion, which is within the company’s guided range of $7-7.5 billion.

Raytheon is expected to benefit from European demand, despite the continent’s efforts to prioritize domestic suppliers. The analysts emphasized that the timing of these benefits is crucial, as the conversion of demand into revenue has been sluggish. They also foresee potential advantages from the 2026 US budget, with Raytheon well-positioned to capitalize on spending associated with the "Golden Dome" defense program.

For Pratt & Whitney, despite the negative aspect of GTF engine groundings reverting to near their 2024 peak levels, there was positive news. The certification of the Advantage variant engine was seen as a favorable development. Additionally, Pratt’s profit margins may exceed Bernstein’s estimates if the trend of delivering high-margin spare engines continues at elevated levels.

In other recent news, Collins Aerospace, part of RTX, has announced enhancements to its SelfServ™ platform, which aims to simplify airport processes by integrating check-in and bag drop functionalities. This upgraded system also incorporates Collins’ SelfPass™ biometric identity solution, allowing passengers to use biometrics for a smoother airport experience. Meanwhile, Raytheon, another RTX business unit, has awarded contracts to Nammo and Northrop Grumman (NYSE:NOC) for the initial development phase of the MK72 solid rocket motor, as part of efforts to increase production capacity for defense systems. Additionally, Raytheon has secured a follow-on contract with the U.S. Army Futures Command to extend the use of its Rapid Campaign Analysis and Demonstration Environment (RCADE) for strategic military decision-making.

Moreover, Collins Aerospace has announced the first shipments of its Airshow™ HD in-flight entertainment system, which offers advanced features like interactive maps and 4K streaming without needing a full cabin management system upgrade. This standalone IFE solution is designed for various jet sizes and provides flexibility and customization for business aviation. These developments reflect RTX’s ongoing commitment to advancing aerospace and defense technology, with reported sales surpassing $80 billion in 2024.

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