CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Our downgrade is on valuation, with shares up 21% year-to-date, well above the 7% average gain for the group. Our 12-month target price of $104, up $5, reflects a 17x multiple of projected 2025 EPS, slightly above RTX’s historical forward average, but merited by a strong medium-term outlook for commercial aircraft. We keep our 2024 EPS estimate at $5.39, but lift 2025’s by $0.02 to $6.14. Q1 adj. EPS of $1.34 vs. $1.22 beat consensus by $0.11. Backlog at March 31 was $202B, up 12% Y/Y. RTX reaffirmed 2024 guidance (EPS of $5.25-$5.40), but some of the concerns from the Q4 update persist, notably on materials sourcing and supply chain. We think RTX is at peak in addressing the powdered metal issue on its GTF engines and fixed-price headwinds in Raytheon should get better as well. One wildcard, in our view, is exposure to aircraft OEM Boeing (BA 170 **), where an FAA-imposed slowdown on 737 MAX production has the potential to subsequently slow down pull-through demand for RTX. BA reports on April 24.