RTX Corporation

Analyst thesis

Our recommendation is based on:

• Diversified portfolio with structural balance: RTX’s ~46% commercial and ~54% defence revenue mix provides earnings resilience across cycles. Core platforms support high switching costs and durable franchise value across the three segments, each generating roughly $28–$30 billion in revenue over the past year.

• Record backlog supports multi-year coverage: RTX ended FY25 with a ~$268 billion backlog (+23% YoY) and 1.56x book-to-bill, reflecting strong order momentum. Exposure to long-cycle defence programs and multi-year OEM and aftermarket contracts underpins revenue visibility and operating leverage.

• Secular defence and aftermarket tailwinds: Rising NATO and European defence commitments support missile and munitions demand, while Pratt & Whitney’s 4,000+ GTF installed base and fleet ageing dynamics drive high-single-digit aftermarket growth and margin expansion.

• Valuation limits near-term upside: Following strong share price performance over the past year, RTX trades at ~29–30x forward earnings, a premium relative to legacy defence contractors. The current multiple suggests the market has largely priced in the company's backlog strength and secular growth tailwinds, leaving limited room for further upside re-rating.