RTX Corporation: Beat and raise across the board, Raytheon accelerates

研报英文原文证据摘录

RTX Corporation: Beat and raise across the board, Raytheon accelerates

Forecast returns

Forecast price appreciation 1.6%

Forecast dividend yield 1.5%

Forecast stock return 3.1%

Market return assumption 9.3%

Forecast excess return -6.2%

Company Description

RTX Corp is a major aerospace parts and engine manufacturer as well as a US prime defense

contractor, formed by the 2020 merger of the United Technologies aerospace businesses and

Raytheon. The business operates in three segments: Collins Aerospace, which manufactures

aircraft components and systems; Pratt & Whitney, which manufactures commercial and

military aircraft engines; and Raytheon, which provides a wide range of military hardware and

services to US and international customers, including missile and missile defense systems,

such as the Patriot.

UBS EPS and Consensus EPS

The UBS EPS is an adjusted diluted EPS metric. It is calculated using the UBS analyst's

interpretation of earnings suitable for valuation purposes divided by the diluted number of

shares. This may differ to the way the consensus EPS metric has been calculated.

Valuation Method and Risk Statement

Our 12-month price target is based on 17.8X our 5-8Q EV/EBITDAP.

Risks

Geared TurboFan challenges: The GTF program has had multiple quality problems, with RTX

guiding an impact of $3-3.5bn cumulative free cash flow headwind from 2023-2025. Given

the complexity of the program, issues could persist beyond what the company has guided to.

Defense budget / Politics: Changes to the Defense budget trajectory, particularly from DOGE,

could immediately impact valuation and estimates. While EPS and cash flow per share were

stable last downturn, cuts risk declines in both. Worsening political gridlock in Washington