Argus Downgrades RTX Corp. (RTX) to Hold, 'fully valued'

Argus analyst John Eade downgraded RTX Corp. (NYSE: RTX) from Buy to Hold.

The analyst comments "We are lowering our rating on RTX Corp. (NYSE: RTX) to HOLD from BUY. The company is the result of a merger between United Technologies and Raytheon Corp., and also factors in the old UTX's divestiture of its elevator (Otis) and air conditioner (Carrier) businesses, and its acquisition of Collins Aerospace. That is a lot of moving parts, and it has taken management a while to bring the pieces in line. RTX's business mix appears favorable compared to that of most defense industry peers given its exposure to the rebounding commercial aerospace segment. But a quality-control problem has emerged that will have a substantial impact on free cash flow in 2023 and a bigger - but not yet fully quantified - impact on free cash flow and EPS in 2024. The quality-control issue also raises questions about the company's long-term cash flow projections, which it recently announced at an Investor Day. Compared to the peer group, RTX shares are trading in line with or below peer averages on metrics such as P/E and price/sales. Given the murky earnings outlook, we think the shares are now fairly valued."

For an analyst ratings summary and ratings history on Raytheon Technologies Corp. click here. For more ratings news on Raytheon Technologies Corp. click here.

Shares of Raytheon Technologies Corp. closed at $87.34 yesterday.

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