Morgan Stanley has raised its 12-month price objective on RTX Corp. to $235.00 from $215.00 while maintaining an Overweight rating on the aerospace and defense manufacturer. The firm cited RTX’s positioning to sustain growth, expand margins and achieve a potential re-rating as core reasons for the target lift. RTX shares were changing hands at $201.28, roughly 0.99% below their 52-week high of $203.03.
Analyst rationale and valuation
The bank highlighted what it called a "compelling valuation argument" and an "underappreciated growth story," noting that RTX currently trades at a discount to peers in the sector when viewed from certain valuation angles. At the same time, InvestingPro data shows RTX carries a price-to-earnings ratio of 39.14 and appears overvalued versus its Fair Value estimate, creating a tension between the upside case suggested by Morgan Stanley and traditional valuation metrics.
Morgan Stanley also reinstated RTX as its Top Pick within the Aerospace industry, signaling that the firm regards RTX more favorably than other names in the sector based on its current assessment.
Recent operating results and market response
RTX reported strong fourth-quarter performance, with adjusted earnings per share of $1.55 and total sales of $24.2 billion, equivalent to 14% organic growth year-over-year. The company's share-price performance has been notable as well, with a price return of 59.74% over the past year and revenue growth of 9.74% reported in the period cited by analysts.
Those results prompted several firms to revisit their models and adjust targets. RBC Capital lifted its price target to $230 while retaining an Outperform rating. Vertical Research Partners raised its target to $227 and maintained a Buy rating. TD Cowen moved its target to $225, and UBS increased its target to $208, specifically calling out strong demand, margin progress across RTX’s businesses and free cash flow projections for 2025 and 2026 that beat expectations.
Company structure and contract activity
RTX, formed by the combination of Raytheon Company and United Technologies, operates across commercial aerospace and defense through business units including Collins Aerospace, Pratt & Whitney, and Raytheon. In a separate development tied to RTX’s defense activities, Raytheon secured a $193.7 million contract modification for tube-launched optically tracked wireless guided missiles, with work scheduled to be completed by 2028.
Market cap and industry standing
InvestingPro identifies RTX as a prominent player in the Aerospace & Defense industry and places its market capitalization at nearly $270 billion. The combination of recent earnings strength, elevated analyst price targets and industry positioning underpins the optimism from Morgan Stanley and other firms, even as valuation comparisons to Fair Value suggest a more complex picture for investors weighing entry points.
Takeaway
Morgan Stanley’s move to raise its price target and reinstall RTX as a Top Pick reflects confidence in the company’s trajectory on growth and margins, supported by solid quarterly results and a notable contract award. Investors should weigh that optimism against valuation metrics that, according to InvestingPro data, indicate the stock trades at a relatively high P/E and may be overvalued relative to its Fair Value estimate.