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Investing.com - Bernstein raised its price target on RTX Corp. (NYSE:RTX) to $157.00 from $154.00 on Wednesday, while maintaining a Market Perform rating on the aerospace and defense company. Currently trading at $151.75, RTX has demonstrated strong momentum with a 33% gain year-to-date, according to InvestingPro data.
The investment firm cited RTX’s Raytheon unit as having "among the strongest outlooks in the defense industry," alongside positive trends for its Collins division.
Bernstein noted that concerns about RTX’s Pratt & Whitney division, particularly related to the Geared Turbofan (GTF) engine, have been a limiting factor for its outlook on the stock.
The firm updated its model for Pratt & Whitney, examining the "highly profitable V2500 aftermarket and GTF outlook," while identifying four ongoing challenges for the division.
Bernstein projected that Pratt & Whitney should see cash advantages after 2027, when V2500 royalties end and GTF customer compensation decreases, with the division likely to "modestly improve margins" despite potential headwinds from lower spare engine sales.
In other recent news, Raytheon, an RTX business, has secured multiple significant contracts, enhancing its defense capabilities. The company has been awarded a $205 million contract from the U.S. Navy for the production of the Phalanx Close-In Weapon System, which will involve upgrades and overhauls through 2029. Additionally, Raytheon has received a $95.7 million contract modification for Tomahawk missile antenna hardware kits from the U.S. Department of Defense, involving the delivery of navigation and communications components. Furthermore, Raytheon Missiles and Defense has been granted a $380 million contract modification for Medium Range Intercept Capability production, bringing the total value of this contract to over $412 million.
Meanwhile, Pratt & Whitney, another RTX business, has been awarded an $18 million contract by the NATO Support Procurement Agency for engine sustainment services for NATO’s E-3 Sentry fleet. This contract includes an option for a two-year extension and covers various technical support services. In addition, Pratt & Whitney Canada has been chosen to lead the Powerplant Hybrid Application REgional Segment (PHARES) project under the European Union’s Clean Aviation Joint Undertaking. This project aims to develop a hybrid-electric propulsion demonstrator for regional aircraft, targeting improved fuel efficiency. These developments reflect significant advancements and collaborations for RTX businesses in both defense and aviation sectors.
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