Analyst Douglas Harned from Bernstein maintained a Hold rating on RTX and increased the price target to $181.00 from $157.00.
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Douglas Harned has given his Hold rating due to a combination of factors impacting RTX’s stock. While Raytheon, a principal segment of RTX, is well-positioned to benefit from increased defense spending by the US and NATO, particularly in missiles and missile defense, there are challenges that temper the overall outlook. The demand for tactical missiles and missile defense systems has surged, driven by heightened NATO spending in response to geopolitical tensions, which is a positive indicator for RTX. However, Raytheon faces production ramp-up challenges, although the extension of backlogs is a favorable sign for the stock.
Despite the growth in missile defense, other areas such as space have encountered difficulties, and Raytheon’s margins have not met previous targets. The potential for growth in export sales on fixed-price contracts could help improve margins, but uncertainties remain. Additionally, while the target price for RTX has been raised to $181, reflecting strength in Raytheon and increased market multiples, concerns about other segments like Pratt & Whitney and the overall balance of risks and opportunities justify a Hold rating.