Raytheon: Dividends & Buybacks Raised After Q1, Buy Case On Track (Preview)

Company Update (RTX US) (Buy)

Summary

• Raytheon shares rose 2.2% today after Q1 results; shares have gained  30%+ since our initiation last May, but remain attractive in our view.

• Defense segments have remained resilient, while Aerospace segments have seen EBIT gradually recover; the synergies target was raised.

• There are signs of improvement in the commercial aftermarket; while the near term is uncertain, a full recovery by 2023 is very likely.

• Q1 results gave management the confidence to move up the low end of the 2021 outlook, raise the dividend by 7% and expand buybacks.

• With shares at $82.50, we expect an exit price of $104 and a total return of 42% (10.6% annualized). The Dividend Yield is 2.5%. Buy.

Why is Raytheon Stock Up?

Raytheon Technologies Corporation shares finished the day up 2.2%, after the company released positive Q1 2021 results this morning (April 27).

We originally initiated a Buy rating on Raytheon stock in May 2020. Since then, shares have gained more than 30% (including dividends).

Even from the hig…