On Wednesday, TD Cowen maintained a positive outlook on RTX Corp. (NYSE: RTX) shares with a reiterated Buy rating and a price target of $142.00. The firm's optimism is fueled by RTX's robust third-quarter defense orders, which significantly exceeded expectations. The company's book-to-bill ratio, a key indicator of future revenue, reached an impressive 2.6 times, with the last twelve months (LTM) average at 1.48 times.
The surge in defense orders has particularly bolstered RTX's international work, which now represents 44% of the company's backlog, compared to approximately 24% of overall sales. This shift toward a more international backlog is seen as a positive development for the company's future revenue mix. It is expected to complement the ongoing productivity improvements within the company.
In addition to the strong defense sector performance, concerns regarding the Geared Turbofan (GTF) engine fleet have been mitigated. The company has secured customer compensation agreements for 75% of the fleet. This development is seen as reducing the tail risk associated with the GTF fleet plan.
The analyst believes these factors combined set the stage for RTX Corp.'s stock to progressively increase in value. The company's recent performance and strategic agreements are providing a solid foundation for continued growth in the stock market.
In other recent news, RTX Corp. has been the focus of multiple analyst upgrades following a robust third-quarter earnings report. The company reported a notable revenue growth and improved segment margins, resulting in an adjusted earnings per share (EPS) for the quarter of $1.45.
This was approximately 8% higher than consensus estimates, leading to an upward adjustment of the full-year 2024 EPS guidance to $5.54. Susquehanna, RBC Capital Markets, UBS, and BofA Securities all raised their price targets for RTX Corp., reflecting the company's strong performance and future financial prospects.
The company's strong quarterly results have been attributed to robust demand for RTX's products in both the commercial original equipment manufacturer (OEM) and aftermarket sectors, as well as in the Defense sector. RTX Corp.'s backlog has also seen significant growth, now standing at $221 billion. These developments have led to an optimistic outlook for RTX Corp.'s sustained growth in earnings and free cash flow.
Despite some concerns over the Collins division's margin, defense market exposure, and uncertainties surrounding the Geared Turbofan engine, Goldman Sachs maintained a neutral rating on RTX, acknowledging the company's solid long-term fundamentals. These recent developments reflect the company's robust financial performance and promising prospects in the aerospace and defense sectors.
InvestingPro Insights
RTX Corp.'s strong performance highlighted in the article is further supported by recent data from InvestingPro. The company's revenue growth of 17.82% over the last twelve months, coupled with a significant 49.21% quarterly revenue growth, aligns with the robust defense orders mentioned in the report. This growth trajectory is reinforced by an InvestingPro Tip indicating that net income is expected to grow this year.
The article's focus on RTX's international expansion is particularly noteworthy when considering another InvestingPro Tip: RTX is a prominent player in the Aerospace & Defense industry. This status likely contributes to its ability to secure significant international orders, as reflected in the increased international backlog mentioned in the article.
Investors may also be interested to know that RTX has maintained dividend payments for 54 consecutive years, according to InvestingPro Tips. This long-standing commitment to shareholder returns complements the company's current growth story and may provide additional confidence to long-term investors.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for RTX Corp., providing a deeper understanding of the company's financial health and market position.
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