Raytheon: Shares Weak Since Q2 Results, But On The Right Track
(Preview) Company Update (RTX US) (Buy)
Summary
RTX shares have been weak since April, fell another 4.6% when Q2 results were released, and have only partially recovered since.
Q2 results showed how supply chain issues are negatively affecting RTX's defense businesses, leading to lower sales and margin declines.
RTX's aerospace businesses continue to benefit from the strong rebound in commercial travel, more than offsetting the weakness in defense.
Group sales and EBIT both grew year-on-year, full-year 2022 outlook was reiterated, and RTX is on track for its medium-term targets.
With shares at $91.78, we expect an exit price of $128 and a total return of 54% (14.5% annualized) by 2025 year-end. Buy.
Introduction
Raytheon shares have been weak since peaking in April, and fell another 4.6% on July 26 when Q2 2022 results were released, though they have rebounded by 1.7% since.
We initiated our Buy rating on RTX in May 2020. Since then, shares have gained 49% (with dividends), including 33% since 2020 year-end, though they have fallen…