Investing.com -- Shares in RTX (NYSE:RTX) dropped on Tuesday, extending losses posted in the prior session, after analysts at Barclays and RBC Capital Markets downgraded their ratings of the aerospace and defense group.
The moves come after RTX warned that it would take a $3 billion financial hit and told airlines that it may need to ground hundreds of airplanes due to a manufacturing flaw. The firm also lowered its annual sales guidance by $5.5B, and decreased its 2025 free cash flow target to $7.5B from $9B.
The U.S. group, formerly known as Raytheon, said that between 600 to 700 of its Pratt & Whitney Geared Turbofan (GTF) engines would need to be pulled off of Airbus A320neo jets from this year until 2026. RTX had previously said in July that the issue, which relates to a rare powder metal defect, may lead to cracking in some parts of around 200 of these engines.
Chief Executive Officer Greg Hayes also flagged that the repair process would now take up to 300 days per engine, up from a prior estimate of 60 days. On average, 350 planes may be grounded per year until 2026. RTX shares slumped by almost 8% on Monday.
In notes to clients, analysts at Barclays slashed their rating of the stock to equal weight from overweight, while RBC analysts cut their outlook to sector perform from outperform.
"The uncertainty related to the duration and cost of the GTF fix along with long-term market share and profitability implications are likely to overhang the stock for some time," the Barclays analysts said.