Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500

RTX Corporation
Recommendation Price 12-Mo. Target Price Report Currency Investment Style
BUY « « « « « USD 101.69 (as of market close Apr 05, 2024) USD 99.00 USD Large-Cap Value
Equity Analyst Stewart Glickman, CFA

GICS Sector Industrials Summary RTX sells aerospace products that support commercial aviation markets, as well as defense
Sub-Industry Aerospace and Defense and intelligence products to militaries and government agencies.

Key Stock Statistics (Source: CFRA, S&P Global Market Intelligence (SPGMI), Company Reports)
52-Wk Range USD 104.91 - 68.56 Oper.EPS2024E USD 5.39 Market Capitalization[B] USD 134.98 Beta 0.62
Trailing 12-Month EPS USD 5.05 Oper.EPS2025E USD 6.12 Yield [%] 2.32 3-yr Proj. EPS CAGR[%] 10
Trailing 12-Month P/E 20.14 P/E on Oper.EPS2024E 18.87 Dividend Rate/Share USD 2.36 SPGMI's Quality Ranking B
USD 10K Invested 5 Yrs Ago 14,711.0 Common Shares Outstg.[M] 1,325.00 Trailing 12-Month Dividend USD 2.36 Institutional Ownership [%] 87.0

Price Performance Analyst's Risk Assessment

LOW MEDIUM HIGH

RTX faces risk from increasing complexity of modern
aerospace products and cyclical demand from commercial
customers. Technical errors in aircraft engines or systems
can cause significant losses and reduce customer trust.
Recessions can also sharply reduce air travel demand,
hurting RTX’s commercial aviation businesses.
Government demand for RTX’s defense businesses is not
cyclical, in our view, but they face unique risks such as
major contract bid losses and cost overruns on fixed-price
contracts. We see RTX’s near-term risks mitigated by
strong long-term demand growth for commercial and
government aerospace applications.

Revenue/Earnings Data

Revenue (Million USD)

1Q 2Q 3Q 4Q Year
2025 E 21,000 E 21,500 E 21,750 E 22,000 E 86,250
Source: CFRA, S&P Global Market Intelligence
2024 E 17,419 E 18,597 E 20,196 E 20,764 E 76,976
Past performance is not an indication of future performance and should not be relied upon as such.
2023 17,214 18,315 13,464 19,927 68,920
Analysis prepared by Stewart Glickman, CFA on Feb 08, 2024 01:45 AM ET, when the stock traded at USD 91.93.
2022 15,716 16,314 16,951 18,093 67,074
2021 15,251 15,880 16,213 17,044 64,388
Highlights Investment Rationale/Risk
2020 11,360 14,061 14,747 16,419 56,587
u In the 4th quarter of 2023, the Collins u Our opinion is Buy. We think RTX presents an
Earnings Per Share (USD)
Aerospace segment generated revenue growth attractive combination of non-cyclical defense
of 12%, although its commercial aftermarket (about 45% of EBIT) and strong long-term 1Q 2Q 3Q 4Q Year
sales rose 23%, while Pratt & Whitney revenues growth prospects in commercial aerospace 2025 E 1.39 E 1.53 E 1.62 E 1.58 E 6.12
rose 14% (with commercial aftermarket up (55%) as global expansion, integration, and 2024 E 1.22 E 1.31 E 1.39 E 1.47 E 5.39
18%). For both segments, revenue growth in climate concerns necessitate larger and more 2023 1.22 1.29 1.25 1.29 5.06
commercial original equipment channels efficient airline fleets. We also see healthy, but 2022 1.15 1.16 1.21 1.27 4.78
(Boeing, Airbus) also exceeded overall segment more moderate, long-term growth at RTX Corp 2021 0.90 1.03 1.26 1.08 4.27
growth, which we attribute to strong orders by as the U.S. and allies increasingly seek military 2020 1.78 0.40 0.58 0.74 3.50
airlines for new planes. deterrence (especially with missile systems) Fiscal Year ended Dec 31. EPS Estimates based on CFRA's
u RTX’s Pratt & Whitney segment (26% of sales in against Russia and China. To be fair, the Operating Earnings; historical earnings are adjusted. In periods
2023) is in the process of completing necessary medium term entails higher risk, as the GTF where a different currency has been reported, this has been
engine repair work will likely be costly, but we adjusted to match the current quoted currency.
repair work on its PW1100G geared turbo fan
(GTF) engine, which supplies more than 1,300 think these headwinds will gradually dissipate.
Dividend Data
of Airbus’ A320neo existing fleet of narrow-body u Risks to our recommendation and target price
planes. The repairs are needed due to the risk of include longer-than-expected repair work on Amount Date Ex-Div. Stk. of Payment
powdered metals causing cracks over time. The the GTF engine recall; higher-than-expected ( USD) Decl. Date Record Date
work will likely take until 2026 to complete, but cost inflation, which can weigh on fixed-price 0.5900 Feb 02 Feb 22 Feb 23 Mar 21 '24
only affects PW1100G engines built between defense contracts; a reduction in U.S. federal 0.5900 Oct 11 Nov 16 Nov 17 Dec 14 '23
2015 and 2021, according to Aviation Week. defense budgets; and an unexpected loss of a 0.5900 Jun 05 Aug 17 Aug 18 Sep 07 '23
u In January 2024, RTX guided to 2024 organic major customer. 0.5900 Apr 24 May 18 May 19 Jun 15 '23
sales growth of 7% to 8%, and free cash flow u Our 12-month target price of $99 reflects a
Dividends have been paid since 1971 . Source: Company reports
rising about 3.5%. Absent the GTF repair work, 16.2x multiple of projected 2025 EPS, in line
Past performance is not an indication of future performance
we think underlying free cash flow growth would with RTX’s historical forward average. Shares and should not be relied as such.
likely be in the 25% range. yield 2.6%, and we estimate a 2024 payout ratio Forecasts are not a reliable indicator of future performance.
of 44%, which we believe is sustainable. Dividends paid in currencies other than the Trading currency have
been accordingly converted for display purposes.

Redistribution or reproduction is prohibited without written permission. Copyright ©2024 CFRA. This document is not intended to provide personal investment advice and it does not take into account the specific investment
objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek independent financial advice regarding the suitability and/or appropriateness of making an investment
or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such investments, if any,
may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they originally invested. Investors should seek advice concerning any impact this investment may have on
their personal tax position from their own tax advisor. Please note the publication date of this document. It may contain specific information that is no longer current and should not be used to make an investment decision. Unless
otherwise indicated, there is no intention to update this document.
1
Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
Business Summary Feb 08, 2024 Corporate information

CORPORATE OVERVIEW. RTX Corp (RTX; previously named Raytheon Technologies) is a commercial Investor contact
aerospace and Defense and intelligence firm conducting business through the following segments: Collins J. Reed (781 522 3000)
Aerospace Systems, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense. We
estimate approximately 60% of RTX revenues are generated on government sales in global Defense and Office
intelligence markets, with the remaining 40% generated in commercial aerospace markets. 1000 Wilson Boulevard, Arlington, Virginia, 22209
Collins Aerospace Systems (37% of RTX revenues in 2023 before inter-segment eliminations) sells
Telephone
aerospace products and services to all types of airframers (private, regional, and commercial jet
781 522 3000
manufacturers), airlines, governments, maintenance, repair and overhaul (MRO) providers, and independent
parts distributors. Collins specializes in aerostructures, avionics (electronic control systems used in Fax
aviation), mechanical systems, and interiors. N/A
Pratt & Whitney (26%) is a global supplier of aircraft engines to aiframers, airlines, aircraft leasing
Website
companies, and governments. P&W’s latest commercial jet engine technology is the Geared Turbofan
www.rtx.com
engine, which first entered service in 2016 and has demonstrated significant reduction in fuel burn, noise
levels, and environmental emissions compared to legacy engines. Most notably, the PW1100G-JM Geared
Turbofan engine is offered on the popular Airbus A320neo family of aircraft. P&W also produces the F135 Officers
engine used to propel the F-35 line of fighter jets for the U.S. and allied militaries. Chief Investment Officer & CEO & Chairman
RTX’s Collins and P&W segments are more commercially focused than Defense focused, with approximately VP of Pension Investments G. J. Hayes
70% of their combined revenue typically generated in commercial aerospace markets, and the remaining R. L. Diamonte
Corporate VP & Controller
30% generated on aerospace sales to government customers, primarily the U.S. military and its allies. Major General Counsel A. L. Johnson
commercial customers for Collins are Boeing and Airbus, which typically combine for around 30% of the R. Maharajh
segment’s sales. P&W does not have material sales to Boeing given its utilization of competitor engines on Executive VP & CFO
its planes, but PW’s largest customer, Airbus, typically contributes about 30% of segment sales. President, COO & Director N. G. Mitchill
Raytheon (37%) specializes in developing advanced sensors, training, and cyber and software solutions for C. T. Calio
government Defense and intelligence customers. Key customers include the U.S. Intelligence Community, Chief Technology Officer
the Department of Defense (DoD), the Federal Aviation Administration (FAA), the National Oceanic and J. M. de Bedout
Atmospheric Administration, the Department of Homeland Security, NASA, and a number of international
customers. Raytheon became a part of RTX through a merger in April 2020.
Board Members
DEMAND DRIVERS. The primary demand driver for the Collins and P&W segments is commercial air travel, in
our view, with the largest end users of their products being airlines. The airline industry experienced an B. A. Harris G. R. Oliver
unprecedented downturn in 2020 and 2021, as the global spread of Covid-19 led to government restrictions B. C. Rogers J. A. Winnefeld
on air travel, while businesses and consumers canceled trips of their own accord to limit the spread of the C. T. Calio L. G. Caret
virus. This put commercial airlines into severe distress, with emergency aid bills passed by the Federal
government in 2020 and 2021 needed to backstop the industry and prevent mass bankruptcies. We expect D. L. Ramos R. K. Ortberg
weakened earnings for Collins and P&W will continue into 2023, as airframers now have material excess E. M. Pawlikowski R. O. Work
finished inventory to work down before fully re-ramping plane production back to pre-pandemic levels. F. G. Reynolds T. A. Atkinson
Demand for RTX’s defense and intelligence products is primarily driven by demand from the U.S. Department G. J. Hayes
of Defense (DoD), in our view, which we see remaining on an upward trend through 2025. Historically, U.S.
Defense spending has shown no correlation to economic growth, budget deficits, debt, or political parties in
power, according to our analysis. In fact, U.S. Defense spending has only materially declined after major Domicile Auditor
military engagements, such as in the mid-1990s following the Cold War and First Persian Gulf War, and in Delaware PricewaterhouseCoopers
2012-2015 as the U.S. drew down major operations in the Middle East. We currently see no such drawdown LLP
for U.S. Defense spending on the horizon, but rather we think U.S. and allied defense budgets will see Founded
abnormally high growth realted to efforts to support Ukraine against the Russian invasion. 1934

COMPETITIVE ADVANTAGES. Following its merger with Raytheon, we estimate RTX generates roughly 60% of Employees
total revenue from domestic and foreign government contracts across all segments, with the remaining 185,000
60% from commercial customers. We think this combination provides an advantage during economic
downturns, as the defense businesses see little cyclical impact due to government customers that are not Stockholders
distressed during recessions the way consumers or private businesses are. This defense backstop should N/A
allow RTX’s commercial businesses to spend more on R&D investments and capex for future growth than
peers can afford during cyclical downturns in commercial aerospace markets, while also keeping RTX from
piling on debt during cyclical downturns. Conversely, many competitors heavily focused on commercial
aerospace will burn cash during downturns, leading to large debt increases and R&D cuts that may hurt
long-term competitiveness.
FINANCIAL TRENDS. Total revenue grew 2.8% in 2023 to $68.9 billion, primarily due to the ongoing recovery
in commercial aerospace demand. Adjusted EPS increased 5.9% in 2023 to $5.06, driven by increased
production volume improving fixed cost absorption, which in turn drove operating margin higher.
RTX currently has high debt relative to earnings, with operating income covering interest expense by only
3.3x in 2023. Given high cyclicality for the commercial side of RTX, a mid-teens or higher interest coverage
ratio would be appropriate, in our view. We think RTX will need to make greater inroads on debt reduction,
although of its $45.6 billion in debt at the end of 2023, just $1.4 billion matures in 2024, and $3.5 billion in
2025, versus cash on hand at year end of $6.6 billion.

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Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
Quantitative Evaluations Expanded Ratio Analysis

Fair Value Rank 1 2 3 4 5 2023 2022 2021 2020

Lowest Highest Price/Sales 1.75 2.24 2.02 1.72
Based on CFRA's proprietary quantitative model, Price/EBITDA 12.57 13.01 11.60 16.40
stocks are ranked from most overvalued (1) to most Price/Pretax Income 31.48 24.51 25.41 NM
undervalued (5). P/E Ratio 16.63 21.11 20.15 20.43
Avg. Diluted Shares Outstg. (M) 1,435.40 1,485.90 1,508.50 1,357.80
Fair Value USD Analysis of the stock’s current worth, based on CFRA’s
Calculation 68.48 proprietary quantitative model suggests that RTX is Figures based on fiscal year-end price
overvalued by USD 33.21 or 32.66%

Volatility LOW AVERAGE HIGH

Key Growth Rates and Averages
Technical BULLISH Since January, 2024, the technical indicators for RTX
Past Growth Rate (%) 1 Year 3 Years 5 Years
Evaluation have been BULLISH"
Net Income NM NM NM
Insider Activity UNFAVORABLE NEUTRAL FAVORABLE Sales 2.75 6.79 14.71

Ratio Analysis (Annual Avg.)

Net Margin (%) 4.64 6.13 4.88
% LT Debt to Capitalization 39.49 32.22 33.54
Return on Equity (%) 4.98 5.91 4.31

Company Financials Fiscal year ending Dec 31

Per Share Data (USD) 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Tangible Book Value -22.12 -12.34 -13.38 -15.01 -22.54 -42.36 -17.98 -19.03 -18.83 -13.14
Free Cash Flow 3.31 2.98 3.08 1.10 7.80 5.57 4.10 2.19 4.92 5.72
Earnings 2.23 3.51 2.58 -2.29 4.06 1.50 5.70 6.13 4.53 6.65
Earnings (Normalized) 5.06 4.78 4.27 3.50 8.26 7.61 6.65 6.61 6.30 6.82
Dividends 2.32 2.16 2.00 2.16 2.94 2.84 2.72 2.62 2.56 2.36
Payout Ratio (%) 101.00 60.19 76.53 NM 44.10 41.18 45.56 40.93 28.71 32.93
Prices: High 108.84 106.02 92.32 158.44 151.07 144.15 128.49 111.69 124.45 120.66
Prices: Low 68.56 80.27 65.02 48.05 103.23 100.48 106.85 83.39 85.50 97.30
P/E Ratio: High 21.50 22.20 21.60 45.30 18.30 18.90 19.30 16.90 19.80 17.70
P/E Ratio: Low 13.50 16.80 15.20 13.70 12.50 13.20 16.10 12.60 13.60 14.30

Income Statement Analysis (Million USD)

Revenue 68,920 67,074 64,388 56,587 45,349 34,701 59,837 57,244 56,098 57,900
Operating Income 5,400 7,417 6,636 1,765 5,735 3,648 8,145 8,078 8,215 9,225
Depreciation + Amortization 4,211 4,108 4,557 4,156 2,708 1,896 2,140 1,962 1,863 1,820
Interest Expense 1,653 1,300 1,330 1,430 1,711 1,182 1,017 997.00 945.00 1,099
Pretax Income 3,836 6,117 5,109 -2,353 4,152 2,504 7,763 7,133 6,467 8,712
Effective Tax Rate 11.90 12.90 18.90 -24.40 10.10 43.80 36.60 23.80 32.60 25.80
Net Income 3,195 5,197 3,864 NM 5,537 5,269 4,552 5,055 7,608 6,220
Net Income (Normalized) 2,170 3,756 3,091 54.60 2,426 1,445 4,155 4,131 4,259 4,991

Balance Sheet and Other Financial Data (Million USD)

Cash 6,587 6,220 7,832 8,802 4,937 6,152 8,985 7,157 7,075 5,229
Current Assets 48,417 42,443 42,050 43,376 61,577 35,503 32,858 28,550 26,706 31,483
Total Assets 161,869 158,864 161,404 162,153 139,615 134,211 96,920 89,706 87,484 91,206
Current Liabilities 46,761 39,114 35,449 35,848 46,594 31,368 24,391 21,906 22,618 23,475
Long Term Debt 42,263 30,606 31,226 30,962 37,625 41,120 24,963 21,697 19,320 17,784
Total Capital 107,032 108,070 108,252 107,705 88,916 86,256 59,037 53,366 49,391 52,405
Capital Expenditures 2,415 2,288 2,134 1,795 1,868 1,467 2,014 1,699 1,652 1,594
Cash from Operations 7,883 7,168 7,071 3,606 8,883 6,322 5,631 3,880 6,383 7,321
Current Ratio 1.04 1.09 1.19 1.21 1.32 1.13 1.35 1.30 1.18 1.34
% Long Term Debt of Capitalization 39.50 28.30 28.80 28.70 42.30 47.70 42.30 40.70 39.10 33.90
% Net Income of Revenue 4.60 7.70 6.00 -6.20 12.20 15.20 7.60 8.80 13.60 10.70
% Return on Assets 2.10 2.89 2.56 0.73 2.62 1.97 5.46 5.70 5.75 6.34
% Return on Equity 5.00 7.20 5.60 -5.00 8.80 3.90 16.10 18.60 14.10 19.60

Source: S&P Global Market Intelligence. Data may be preliminary or restated; before results of discontinued operations/special items. Per share data adjusted for stock dividends; EPS diluted.
E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

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Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
Sub-Industry Outlook Industry Performance

Our fundamental outlook for the Aerospace &
Defense (A&D) sub-industry for the next year is
neutral. We expect growth in U.S. and allied
defense spending over the next several years
following the Russian invasion of Ukraine, in turn
driving healthy sales growth for defense
businesses that make up roughly 65% of sub-
industry revenue. However, much of this boost will
likely be offset by the negative impact of inflation
on fixed-price contracts. We forecast solid Y/Y
top-line growth for commercial aerospace
businesses from depressed 2022 levels, but
earnings will likely still be well below pre-pandemic
peak levels for Boeing and any suppliers with high
exposure to its 737 or 787 programs.
U.S. and allied defense spending is likely to be on a
relatively elevated growth trajectory in the coming
years in the wake of Russia’s atrocities against
Ukraine, in our view, as dovish diplomacy
strategies fall out of favor while defense build-up
and deterrence are in vogue. Additionally, China’s
recent military threats against Taiwan are further
persuading defense doves in Congress to support
a build-up and deterrence strategy, in our view. We
view the recent Israel-Hamas conflict as being
more localized, though, and see it moving the
needle less in regard to global defense spending.
CFRA forecasts 5%-6% annual growth in U.S.
defense spending during 2023-2025, above
trailing 10-year average annual growth of 1%.
While we forecast healthy top-line growth for
defense firms in 2023, margins are likely to be
hurt by persistent high inflation. Defense firms
typically generate 50%-75% of sales on fixed-
price contracts that stretch for years, meaning
much of their 2023 revenues were contracted
before the 2022 inflation surge. Fixed-price
contracts do not typically allow higher-than-
expected costs to be passed on to buyers, putting
defense firms at high risk of weak margins in
2023-2024, in our view. We see firms leveraging
share buybacks to help boost EPS amid reduced
profitability.
After defense, we estimate 35% of A&D revenues
come from commercial aerospace. We think most
global airlines are experiencing record GICS Sector: Industrials
utilization of single-aisle jets amid strong Sub-Industry: Aerospace and Defense
leisure travel demand post-pandemic. We also Based on S&P 1500 Indexes
expect wide-body utilization will fully recover Five-Year market price performance through Apr 06, 2024
over the next 12 months as tourists and
businesses have taken advantage of loosened
international travel restrictions. These trends
are leading to strong orders and backlogs for
the major planemakers, but regulatory and
execution foul-ups at Boeing and global supply
chain suppliers have prevented production
from fully recovering to meet healthy demand.
We see the commercial aircraft supply chain
exiting 2023 at annualized production run
rates still roughly 20% below pre-pandemic
peak, but marking steady improvement versus
2022, down roughly 30%.
An issue that could cause the sub-industry’s
commercial earnings to lag behind the full
demand recovery is Boeing’s excess inventory.
As of July 2023, Boeing had inventory of 228
completed 737s and 85 completed 787s due
to the programs’ safety and/or regulatory
failures. These large inventories will keep
Boeing from fully re-ramping production rates
to near pre-pandemic levels until late 2024 at
the earliest, in our view. In turn, sales volume
for Boeing and key suppliers will likely
materially lag the recovery in air travel demand.
Year-to-date through October 18, the S&P
Aerospace & Defense index fell 5% compared
to a 13% gain for the S&P Composite 1500.
NOTE: A sector chart appears when the sub-industry does not have
/ Jonathan Sakraida sufficient historical index data.
All Sector & Sub-Industry information is based on the Global Industry
Classification Standard (GICS).
Past performance is not an indication of future performance and should
not be relied upon as such.
Source: CFRA, S&P Global Market Intelligence

Sub-Industry: Aerospace and Defense Peer Group*: Aerospace and Defense

Recent 30-Day 1-Year Fair Return
Stock Stock Stk. Mkt. Price Price P/E Value Yield on Equity LTD to
Peer Group Symbol Exchange Currency Price Cap. (M) Chg. (%) Chg. (%) Ratio Calc. (%) (%) Cap (%)

RTX Corporation RTX NYSE USD 99.31 131,819.0 10.3 0.6 20.0 68.48 2.4 5.0 39.5
Axon Enterprise, Inc. AXON NasdaqGS USD 306.83 23,154.0 -2.6 41.2 133.0 N/A N/A 12.1 29.0
General Dynamics Corporation GD NYSE USD 293.22 80,321.0 7.2 28.0 24.0 283.46 1.9 16.6 27.0
HEICO Corporation HEI NYSE USD 187.90 23,020.0 -0.5 12.6 61.0 155.80 0.1 13.8 39.9
Howmet Aerospace Inc. HWM NYSE USD 65.53 26,887.0 -3.6 55.6 35.0 56.40 0.3 20.0 44.5
L3Harris Technologies, Inc. LHX NYSE USD 209.59 39,841.0 -2.0 6.2 17.0 194.65 2.2 6.4 33.3
Lockheed Martin Corporation LMT NYSE USD 454.04 109,195.0 5.1 -7.3 16.0 388.61 2.8 86.0 67.9
Northrop Grumman Corporation NOC NYSE USD 459.48 68,067.0 0.3 -2.4 20.0 459.81 1.6 13.7 44.7
Textron Inc. TXT NYSE USD 95.50 18,373.0 6.9 40.7 17.0 114.33 0.1 13.1 28.2
The Boeing Company BA NYSE USD 183.29 111,832.0 -8.9 -12.7 NM N/A N/A 13.6 127.2
TransDigm Group Incorporated TDG NYSE USD 1,204.36 66,970.0 3.8 66.7 42.0 775.74 N/A -42.5 114.5

*For Peer Groups with more than 10 companies or stocks, selection of issues is based on market capitalization.
NA-Not Available; NM-Not Meaningful.
Note: Peers are selected based on Global Industry Classification Standards and market capitalization. The peer group list includes companies with similar characteristics, but may not include all the companies within the same
industry and/or that engage in the same line of business.

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Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
Analyst Research Notes and other Company News
January 24, 2024
04:50 PM ET... CFRA Keeps Buy Opinion on Shares of RTX Corporation (RTX
89.49****):
Our 12-month target price of $99, raised by $9, reflects a 16.2x multiple of
projected 2025 EPS, in line with RTX’s historical forward average. We cut our 2024
EPS estimate by $0.58 to $5.39 and start 2025’s at $6.12. Q4 EPS of $1.29 vs.
$1.27, beat the consensus view by $0.04. Organic sales rose 10%, led by Pratt &
Whitney (+4%), as commercial aerospace remains a nice tailwind, both for new
orders as well as aftermarket. We still see a few clouds on the horizon on the supply
chain front, and we see only modest EPS improvement in 2024 before accelerating
earnings in 2025. There are some headwinds at Raytheon, notably on fixed price
contracts that have underperformed in a rising cost environment, but we expect
these to be less influential in coming periods. Shares yield 2.6%, adding to total
return potential. We estimate a 2024 payout ratio of about 44%, which we think is
sustainable. / Stewart Glickman, CFA
October 24, 2023
11:44 AM ET... CFRA Reiterates Buy Recommendation on Shares of RTX Corporation
(RTX 77.59****):
We trim our 12-month target to $90 from $94, valuing shares at 15.0x our 2024
EPS estimate (lifted to $5.97 from $5.85; 2023 EPS adjusted to $5.01 from $5.05),
a discount to RTX’s five-year forward P/E average of 18.8x. RTX posted adjusted Q3
EPS of $1.25 vs. $1.21 (+3% Y/Y), beating consensus by $0.03. Q3 organic revenues
rose 12% Y/Y, driven by RTX’s commercial aviation business as air travel demand
remains strong. Commercial aftermarket and originial equipment manufacturer
(OEM) sales were both up by double digits (+25% and +26%, respectively). RTX took
a sales charge of $5.4 billion in Q3, resulting in an expected $2.9 billion operating
profit impact for the Pratt & Whittney powder metal recalls. RTX’s board approved a
$10 billion accelerated share repurchase program to capitalize on the stock’s
depressed share price – an action we see helping to prop up share performance. We
continue to see RTX shares as undervalued at current levels and reiterate our Buy
view. / Jonathan Sakraida
September 11, 2023
01:33 PM ET... CFRA Maintains Buy Rating on Shares of RTX Corporation (RTX
76.91****):
RTX shares are trading lower today following an update on expected impacts from
the recall of defective Pratt & Whitney parts used in Airbus engines. RTX is
estimating 600-700 engines will be removed for shop visits, with a majority
expected to be removed in 2023 and early 2024. RTX announced that the company
could take a pre-tax operating profit impact of up to $3.5B over the next several
years, with a $3B pre-tax charge expected in Q3 2023 (including estimates of
potential compensation to customers for operational impacts). RTX confirmed that
impacts to free cash will likely extend out to 2025, with a $1.5B hit expected for that
year ($7.5B in free cash flow forecasted for 2025). We believe that there is a risk for
additional costs to surface related to RTX’s engine manufacturing woes and lower
our 12-month target to $94 from $105, valuing shares at 16x our 2024 EPS
forecast, a discount to RTX’s five-year forward P/E average. We keep our Buy rating
as we see upside from where shares are currently trading. / Jonathan Sakraida
July 25, 2023
03:32 PM ET... CFRA Keeps Buy Rating on Shares of RTX Corporation (RTX
86.25****):
RTX shares are trading lower today following the recall announcement of Pratt &
Whitney’s (segment is 31% of total sales) geared turbofan engines, requiring
hundreds of Airbus jetliners to be inspected for potential faults in manufacturing
quality. The recall will be costly, with RTX slashing free cash flow guidance by $500
million to account for the 200 engines that are to be inspected in 2023. An
additional 1,000 engines will need to be recalled and reviewed in 2024, with the
potential full-year impact still being assessed. We see overhang from the recall
extending out to 2025 and lower our 12-month target to $105 from $118, valuing
shares at 18x our 2024 EPS forecast (reduced to $5.85 from $6.23; 2023 EPS
lowered to $5.05 from $5.10), slightly lower than RTX’s five-year forward P/E
average given engine quality issues. Despite these recent challenges, we see upside
potential in the shares at current levels and maintain RTX at a Buy rating. /
Jonathan Sakraida
April 25, 2023
Note: Research notes reflect CFRA's published opinions and analysis on the stock at the time the note was published. The note reflects the views of the equity analyst as of
the date and time indicated in the note, and may not reflect CFRA's current view on the company.
Redistribution or reproduction is prohibited without prior written permission. Copyright ©2024 CFRA.
10:59 AM ET... CFRA Reiterates Buy View on Shares of Raytheon Technologies
Corporation (RTX 101.47****):
We keep our 12-month target at $118, valuing shares at 19.0x our 2024 EPS
estimate (kept at $6.23; 2023 reduced to $5.10 from $5.42) – in line with RTX’s five-
year forward P/E average. RTX posts Q1 EPS of $1.22 vs. $1.15 (+6% Y/Y),
surpassing the consensus forecast by $0.09. Q1 sales expanded 10% Y/Y (including
10% organic growth), with Collins and Pratt & Whittney (63% of revenue, +16% Y/Y)
seeing accelerating growth as global airline travel continues to rebound. Raytheon
(37%, +2% Y/Y) benefited from higher sales in Advanced Technology and Air Power
programs. China’s reopening and reversal in Covid-19 policy has strongly supported
the recovery in global air traffic, with domestic revenue passenger miles now
reaching pre-pandemic levels. On defense, we anticipate Raytheon sales to continue
to recover on increased global budgets. We’re encouraged by signs of stabilization in
supply chains, and coupled with a record backlog, we see RTX positioned well for
growth. / Jonathan Sakraida
January 24, 2023
10:19 AM ET... CFRA Maintains Buy Opinion on Shares of Raytheon Technologies
Corporation (RTX 97.00****):
We lift our 12-month target from $105 to $118, 19x our 2024 EPS estimate (raised
to $6.23 from $6.15; 2023 lowered to $5.42 from $5.58) — in line with RTX’s five-
year forward P/E average. Q4 EPS of $1.27 (+18% Y/Y) beat consensus by $0.02. Q4
sales grew 6% Y/Y, with Collins and Pratt & Whitney (60% of sales, +12% Y/Y) seeing
strong growth on continued recovery in global air travel, while Raytheon (40%, -1%
Y/Y) saw a decline primarily on softer demand for manned military aircraft, in our
view. We see the global air traffic recovery continuing apace in 2023-2024,
bolstered by China’s recent reopening. With strong demand up against lingering
supply constraints in the commercial aircraft supply chain, we see Collins+P&W
gaining more pricing power and growing sales a cumulative 25% in 2023-2024. We
also see sales growth recovering to a 3%-4% annual range at Raytheon on higher
global defense budgets. Healthy volume and pricing gains will allow EBIT margin to
expand to 13.5% in 2024 from 11.7% in 2022, in our view. / Colin Scarola
October 25, 2022
12:24 PM ET... CFRA Maintains Buy Opinion on Shares of Raytheon Technologies (RTX
88.00****):
We lower our 12-month target to $105 from $106, 17x our 2024 EPS estimate
(started at $6.15; 2023 lowered to $5.58 from $5.87; 2022 to $4.79 from $4.86). We
use a lower multiple than RTX’s five-year forward P/E average of 19x on elevated risk
that supply constraints hampering aerospace manufacturers don’t fully taper during
2023, as we anticipate. Q3 adjusted EPS of $1.21 (-4% Y/Y) beat sell-side
consensus by $0.07 on below the line items, with revenue and EBIT missing
expectations. We think the disappointing fundamentals were largely due to worse-
than-expected labor and part shortages in the aerospace supply chain, with
combined revenue for commercially focused Collins and Pratt & Whitney (60% of
total) slowing to 12% growth vs. +13% in Q2, despite accelerating end-market
demand from airlines, in our view. We think these shortages will ease throughout
2023, allowing for 11% total sales growth at RTX in 2023. We expect a healthy step-
up in U.S. and allied defense funding will contribute to growth as well. / Colin Scarola
5
Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
Analysts Recommendations Wall Street Consensus Opinion

Hold

Wall Street Consensus vs. Performance

For fiscal year 2024, analysts estimate that RTX will earn
USD 5.39. For fiscal year 2025, analysts estimate that RTX's
earnings per share will grow by 13.51% to USD 6.12.

No. of
Recommendations % of Total 1 Mo.Prior 3 Mos.Prior
Buy 6 23 6 6
Buy/Hold 2 8 2 2
Hold 15 58 15 16
Weak hold 1 4 1 0
Sell 1 4 1 1
No Opinion 1 4 1 0
Total 26 100 26 25

Wall Street Consensus Estimates

Fiscal Year Avg Est. High Est. Low Est. # of Est. Est. P/E
2025 6.12 6.78 5.22 20 16.24
2024 5.39 5.55 5.19 20 18.43
2025 vs. 2024 p 14% p 22% p 1% N/A% q -12%

Q1'25 1.40 1.58 1.29 6 70.75

Q1'24 1.22 1.31 1.11 17 81.15
Q1'25 vs. Q1'24 p 15% p 21% p 16% q -65% q -13%
Forecasts are not reliable indicator of future performance.
Note: A company's earnings outlook plays a major part in any investment decision. S&P Global Market Intelligence organizes the earnings estimates of over 2,300 Wall Street analysts, and
provides their consensus of earnings over the next two years, as well as how those earnings estimates have changed over time. Note that the information provided in relation to consensus
estimates is not intended to predict actual results and should not be taken as a reliable indicator of future performance.
Note: For all tables, graphs and charts in this report that do not cite any reference or source, the source is S&P Global Market Intelligence.

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Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
Glossary

STARS Abbreviations Used in Equity Research Reports

Since January 1, 1987, CFRA Equity and Fund Research Services, and its CAGR - Compound Annual Growth Rate
predecessor S&P Capital IQ Equity Research has ranked a universe of U.S. CAPEX - Capital Expenditures
common stocks, ADRs (American Depositary Receipts), and ADSs (American CY - Calendar Year
Depositary Shares) based on a given equity's potential for future performance. DCF - Discounted Cash Flow
Similarly, we have ranked Asian and European equities since June 30, 2002. DDM - Dividend Discount Model
Under proprietary STARS (Stock Appreciation Ranking System), equity analysts EBIT - Earnings Before Interest and Taxes
rank equities according to their individual forecast of an equity's future total EBITDA - Earnings Before Interest, Taxes, Depreciation & Amortization
return potential versus the expected total return of a relevant benchmark (e.g., EPS - Earnings Per Share
a regional index (MSCI AC Asia Pacific Index, MSCI AC Europe Index or S&P 500® EV - Enterprise Value
Index)), based on a 12-month time horizon. STARS was designed to help FCF - Free Cash Flow
investors looking to put their investment decisions in perspective. Data used to FFO - Funds From Operations
assist in determining the STARS ranking may be the result of the analyst's own FY - Fiscal Year
models as well as internal proprietary models resulting from dynamic data P/E - Price/Earnings
inputs. P/NAV - Price to Net Asset Value
PEG Ratio - P/E-to-Growth Ratio
S&P Global Market Intelligence's Quality Ranking PV - Present Value
(also known as S&P Capital IQ Earnings & Dividend Rankings) - Growth and R&D - Research & Development
S&P Capital IQ Earnings & Dividend Rankings stability of earnings and dividends ROCE - Return on Capital Employed
are deemed key elements in establishing S&P Global Market Intelligence's ROE Return on Equity
earnings and dividend rankings for common stocks, which are designed to ROI - Return on Investment
capsulize the nature of this record in a single symbol. It should be noted, ROIC - Return on Invested Capital
however, that the process also takes into consideration certain adjustments ROA - Return on Assets
and modifications deemed desirable in establishing such rankings. The final SG&A - Selling, General & Administrative Expenses
score for each stock is measured against a scoring matrix determined by SOTP - Sum-of-The-Parts
analysis of the scores of a large and representative sample of stocks. The range WACC - Weighted Average Cost of Capital
of scores in the array of this sample has been aligned with the following ladder
of rankings: Dividends on American Depository Receipts (ADRs) and American Depository
Shares (ADSs) are net of taxes (paid in the country of origin).
A+ Highest B Below Average
Qualitative Risk Assessment
A High B- Lower
A Above C Lowest
Reflects an equity analyst's view of a given company's operational risk, or the
risk of a firm's ability to continue as an ongoing concern. The Qualitative Risk
B+ Average D In Reorganization
Assessment is a relative ranking to the U.S. STARS universe, and should be
NC Not Ranked reflective of risk factors related to a company's operations, as opposed to risk
and volatility measures associated with share prices. For an ETF this reflects on
EPS Estimates a capitalization-weighted basis, the average qualitative risk assessment
CFRA's earnings per share (EPS) estimates reflect analyst projections of future assigned to holdings of the fund.
EPS from continuing operations, and generally exclude various items that are
viewed as special, non-recurring, or extraordinary. Also, EPS estimates reflect STARS Ranking system and definition:
either forecasts of equity analysts; or, the consensus (average) EPS estimate, ««««« 5-STARS (Strong Buy):
which are independently compiled by S&P Global Market Intelligence, a data Total return is expected to outperform the total return of a relevant benchmark,
provider to CFRA. Among the items typically excluded from EPS estimates are by a notable margin over the coming 12 months, with shares rising in price on
asset sale gains; impairment, restructuring or merger-related charges; legal an absolute basis.
and insurance settlements; in process research and development expenses; ««««« 4-STARS (Buy):
gains or losses on the extinguishment of debt; the cumulative effect of Total return is expected to outperform the total return of a relevant benchmark
accounting changes; and earnings related to operations that have been over the coming 12 months.
classified by the company as discontinued. The inclusion of some items, such
as stock option expense and recurring types of other charges, may vary, and ««««« 3-STARS (Hold):
depend on such factors as industry practice, analyst judgment, and the extent Total return is expected to closely approximate the total return of a relevant
to which some types of data is disclosed by companies. benchmark over the coming 12 months.
««««« 2-STARS (Sell):
12-Month Target Price Total return is expected to underperform the total return of a relevant
The equity analyst's projection of the market price a given security will benchmark over the coming 12 months.
command 12 months hence, based on a combination of intrinsic, relative, and
««««« 1-STAR (Strong Sell):
private market valuation metrics.
Total return is expected to underperform the total return of a relevant
benchmark by a notable margin over the coming 12 months, with shares falling
in price on an absolute basis.
Relevant benchmarks:
In North America, the relevant benchmark is the S&P 500 Index, in Europe and
in Asia, the relevant benchmarks are the MSCI AC Europe Index and the MSCI AC
Asia Pacific Index, respectively.

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Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
Disclosures

Stocks are ranked in accordance with the following ranking methodologies:
STARS Stock Reports:
Qualitative STARS rankings are determined and assigned by equity analysts. For reports
containing STARS rankings refer to the Glossary section of the report for detailed
methodology and the definition of STARS rankings.
Quantitative Stock Reports:
Quantitative rankings are determined by ranking a universe of common stocks based on 5
measures or model categories: Valuation, Quality, Growth, Street Sentiment, and Price
Momentum. In the U.S., a sixth sub-category for Financial Health will also be displayed.
Percentile scores are used to compare each company to all other companies in the same
universe for each model category. The five (six) model category scores are then weighted
and rolled up into a single percentile ranking for that company. For reports containing
quantitative rankings refer to the Glossary section seof the report for detailed methodology
and the definition of Quantitative rankings.
STARS Stock Reports and Quantitative Stock Reports:
The methodologies used in STARS Stock Reports and Quantitative Stock Reports
(collectively, the "Research Reports") reflect different criteria, assumptions and analytical
methods and may have differing rankings. The methodologies and data used to generate
the different types of Research Reports are believed by the author and distributor
reasonable and appropriate. Generally, CFRA does not generate reports with different
ranking methodologies for the same issuer. However, in the event that different
methodologies or data are used on the analysis of an issuer, the methodologies may lead
to different views on the issuer, which may at times result in contradicting assessments of
an issuer. CFRA reserves the right to alter, replace or vary models, methodologies or
assumptions from time to time and without notice to clients.
STARS Stock Reports:
Global STARS Distribution as of March 31, 2024
Ranking North America Europe Asia Global
Buy 37.6% 34.7% 44.1% 38.5%
Hold 52.6% 52.5% 50.6% 52.1%
Sell 9.7% 12.8% 5.4% 9.4%
Total 100.0% 100.0% 100.0% 100.0%
Analyst Certification:
STARS Stock Reports are prepared by the equity research analysts of CFRA and its
affiliates and subsidiaries. Quantitative Stock Reports are prepared by CFRA. All of the
views expressed in STARS Stock Reports accurately reflect the research analyst's
personal views regarding any and all of the subject securities or issuers; all of the views
expressed in the Quantitative Stock Reports accurately reflect the output of CFRA's
algorithms and programs. Analysts generally update STARS Stock Reports at least four
times each year. Quantitative Stock Reports are generally updated weekly. No part of
analysts’ or CFRA’s compensation was, is, or will be directly or indirectly related to the
specific rankings or views expressed in any Stock Report.
About CFRA Equity Research:
This Research Report is published and originally distributed by Accounting Research &
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Stock Report | April 06, 2024 | NYSESymbol: RTX | RTX is in the S&P 500
RTX Corporation
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