Raytheon: Mixed Q1 Results from a Long-Term Compounder

Company Update (RTX US) (Buy)

Highlights

• RTX has strong businesses in aerospace and defense

• Recovery from a weak 2022 will add to mid-term growth

• In Q1, a rebound in aerospace offset headwinds in defense

• 2023 outlook was reaffirmed; we see stronger growth in 2024

• Our forecasts show a 41% return (14.2% p.a.) by 2025. Buy

Introduction

We review Raytheon Technologies (RTX), where we have a Buy rating, after Q1 2023 results were released on Tuesday (April 25). RTX shares finished the day down 1.3%, and the share price is up only 2% from a year ago:

Raytheon Share Price (Last 1 Year)

Source: Google Finance (25-Apr-23).

We have followed RTX, including its predecessor United Technologies (UTX), for more than 5 years, and first published our research publicly with a Buy rating in May 2020. Since then RTX shares have gained 66% (including dividends) in just under 3 years, including 48% since the start of 2021.

Q1 results showed that RTX financials continued to be in flux after the exceptional macro environment in 2022. Adjusted EBIT …