TD Cowen has a positive outlook on RTX Corp. (NYSE: RTX) as the firm increased its price target on the stock to $142.00 from the previous $115.00.
The Buy recommendation from TD Cowen, however, remains unchanged.
The adjustment in price target follows RTX's second-quarter performance, which exceeded operational expectations. The firm's analyst highlighted the new CEO Chris Calio's effective approach to addressing legal and contractual liabilities and his emphasis on execution as key factors enhancing confidence in the company's future prospects.
RTX's favorable position is also attributed to strong demand in the aftermarket and defense sectors. These elements are expected to contribute to mid-teen percentage growth in adjusted earnings per share (EPS) for the years 2025 and 2026, with cash flow per share (CFPS) anticipated to reach $6.90 in 2026.
The new price target of $142 is based on a 2024 total enterprise value to earnings before interest, taxes, depreciation, amortization, and pension (TEV/EBITDAP) multiple of 20 times. This valuation is compared to General Electric 's (NYSE:GE) multiple of 23 times.
RTX had reported a robust second-quarter 2024 performance, with earnings per share of $1.41, surpassing consensus estimates. This was driven by a 10% growth in organic sales, including a 19% increase in commercial original equipment sales. As a result, RBC Capital Markets, Baird, and UBS have all raised their price targets for RTX Corp., while maintaining neutral ratings.
RTX has also revised its 2024 sales and earnings per share forecast upwards, despite reducing its free cash flow guidance by about $1 billion. The company's strong performance is attributed to the recovery of the commercial aviation sector, resulting in an increased profit forecast for the full year of 2024.
InvestingPro Insights
As RTX Corp. (NYSE: RTX) garners a positive outlook from TD Cowen, real-time data from InvestingPro provides additional context to the company's financial standing. With a market capitalization of $150.61 billion and a high P/E ratio of 68.42, RTX showcases a significant valuation in the market. The company's revenue growth over the last twelve months as of Q2 2024 stands at 2.61%, indicating a steady expansion in its business operations. Furthermore, RTX has demonstrated a notable 10.37% price total return over the last week, aligning with the analyst's confidence in the firm's performance.
InvestingPro Tips highlight that RTX's management has been focused on share buybacks, which can be a signal of the management's belief in the company's value. Additionally, RTX has maintained dividend payments for 54 consecutive years, showcasing its commitment to returning value to shareholders. These factors, coupled with the expected growth in net income this year, may provide investors with further assurance of the company's stability and potential for growth.
For investors seeking a deeper dive into RTX's financials and strategic positioning, InvestingPro offers additional tips. There are 14 more InvestingPro Tips available, which can be accessed through their platform, including insights on earnings revisions, stock volatility, and industry standing. Subscribers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a comprehensive analysis to inform investment decisions.
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