On Tuesday, TD Cowen expressed a positive outlook on RTX Corp. (NYSE: RTX), revising its share price target upward to $115 from the previous $106. The firm maintained its Outperform rating on the stock. The revision reflects the analyst's view that RTX Corp. is an undervalued company poised for growth, particularly in the commercial aftermarket and defense sectors.
The defense and aerospace company is expected to experience a substantial upswing in the coming years, with projections of approximately 15% adjusted EBITDAP (Earnings Before Interest, Taxes, Depreciation, Amortization, and Pension) increases from 2024 to 2026. This growth is anticipated due to RTX's strong presence in both the commercial and defense markets. The analyst highlighted the company's potential, noting its current trading value at a significant discount compared to its industry peers.
According to the analyst, RTX's Total Enterprise Value (TEV) to Adjusted EBITDAP ratio stands at 14.4 times, which represents a 32% average discount when compared to competitors such as GE, HEI, and TDG. This gap indicates that RTX shares could be undervalued, offering an attractive entry point for investors.
The revised price target of $115 is based on a 6% expected cash flow yield for the year 2026. The firm's confidence in RTX is rooted in the company's solid fundamentals and favorable market position, which are expected to drive its financial performance in the near future. The Outperform rating is reaffirmed, suggesting that RTX Corp. is likely to outperform the broader market or sector according to the firm's analysis.
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