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On Tuesday, BofA Securities adjusted its outlook on RTX Corp. (NYSE: RTX), increasing the price target to $145 from the previous $140 while maintaining a Buy rating on the stock. The move reflects a positive assessment of the company's performance, particularly in its defense segments, and a steady commercial aerospace sector amid broader economic fluctuations.
The analyst from BofA Securities highlighted RTX Corp.'s successful capture of the market's initial enthusiasm for the merger between United Technologies Corporation (NYSE:RTX) (UTC) and Raytheon Company (NYSE:RTN), which has led to a robust quarter for the defense industry. The analyst noted that RTX's defense business shone across its various segments, demonstrating significant progress.
RTX Corp.'s recent financial results have been deemed meaningful by the analyst, who pointed to a substantial backlog of $60 billion, approximately $17 billion in bookings for the third quarter, and a Book-to-Bill ratio of 1.48x. These figures suggest that the turnaround for RTX, formerly known as Raytheon, is not just underway but is still in its early stages.
The analyst's report also anticipates continued strong demand in the defense sector, particularly from international customers. This is seen as a favorable development for RTX, which has secured around $7.5 billion in international bookings and has an international backlog of approximately $26 billion.
In other recent news, RTX Corp has been making significant strides in the defense industry. The company has secured a contract from the U.S. Army to enhance battlefield operations with directed energy wireless power beaming capabilities, a technology expected to streamline logistics and bolster the security of U.S. troops' positions. Additionally, RTX Corp has been awarded contracts totaling $676 million for the continued production of the TOW weapon system for the U.S. Army.
In terms of financial performance, RTX Corp reported strong third-quarter earnings, surpassing both estimated and consensus figures. The adjusted earnings per share (EPS) for the quarter was $1.45, leading to an upward revision of its 2024 adjusted EPS guidance to a range of $5.50 to $5.58. The company's revenue also saw an organic increase of 8%.
Analysts have responded positively to these recent developments. TD Cowen maintained a Buy rating on RTX Corp shares, while Deutsche Bank (ETR:DBKGn), Susquehanna, and UBS all adjusted their price targets upwards. However, Goldman Sachs maintained a Neutral rating, expressing concerns over certain aspects of RTX Corp's operations.
InvestingPro Insights
RTX Corp.'s strong performance, as highlighted by BofA Securities, is further supported by recent InvestingPro data. The company's revenue growth of 17.82% over the last twelve months and an impressive 49.21% quarterly growth in Q3 2024 underscore its robust financial position. This aligns with the analyst's positive outlook on RTX's defense segments and commercial aerospace sector.
InvestingPro Tips reveal that RTX has maintained dividend payments for 54 consecutive years, demonstrating long-term financial stability. This consistency in shareholder returns complements the company's strong backlog and bookings mentioned in the article. Additionally, RTX is noted as a prominent player in the Aerospace & Defense industry, reinforcing its market position and potential for continued growth.
For investors seeking a deeper understanding of RTX's financial health and future prospects, InvestingPro offers 12 additional tips, providing a comprehensive analysis of the company's performance and potential.
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