RTX stock rises 4% after Jefferies upgrade, lifts target to $220

Shares of RTX Corp. rose on Thursday after Jefferies upgraded the aerospace and defense company to Buy from Hold and raised its price target to $220 from $210.

The Wall Street firm cited improving profit margins, growth opportunities in the commercial aerospace engine aftermarket, and the strength of RTX's defense business as key drivers behind its more optimistic outlook.

RTX stock gained 4.4% in trading to reach an intraday high of $180.42.

Margin expansion and aerospace growth support outlook

Jefferies analyst Sheila Kahyaoglu raised the firm's earnings per share estimates for 2026 through 2028 by roughly 5% on average.

The brokerage expects operational improvements at Collins Aerospace, pricing gains in Pratt & Whitney original equipment, and returns from the geared turbofan (GTF) aftermarket business to drive higher profitability.

Explaining the upgrade, Kahyaoglu wrote: “RTX is home to leading franchises across Aerospace and Defense, with meaningful growth runway from marquee competitive positions and market growth [and defense] budget support.”

She also projects RTX could generate earnings per share of $10.45 by 2028, well above Wall Street's current consensus estimate of $8.40, according to FactSet.

The company reported an operating profit margin of about 11.5% in 2025.

Jefferies believes that figure could improve to between 14% and 15% by 2028 as margins expand across its commercial operations and the company continues share repurchases.

The brokerage values RTX at 18.5 times projected 2027 EBITDA and estimates the stock offers a 3.6% free cash flow yield.

Defense business remains a key growth driver

Jefferies expects RTX's defense operations to remain a major contributor to future growth.

The firm estimates that approximately 75% of Raytheon's business is tied to sensors and effectors, a market it expects to grow at an 8% compound annual growth rate through 2030.

According to the brokerage, the defense segment could achieve operating margins of 14% or higher, comparable to Lockheed Martin's Missiles and Fire Control division.

The outlook is supported by favorable US Department of Defense spending and international demand.

RTX has also secured several significant defense contracts in recent months.

Raytheon, one of the company's business units, received a $1.02 billion contract from the US Department of War to supply NASAMS fire units under the fiscal 2026 Foreign Military Sales program for Kuwait.

Separately, Raytheon won a $515 million US Navy contract for its SPY-6 family of radars, including upgrades for Flight IIA destroyers.

The company, together with Northrop Grumman, was also awarded a phase two contract from DARPA for the Burn n' Go advanced rocket motor program.

Strong cash generation and shareholder returns

Jefferies projects RTX will generate more than $9 billion in discretionary free cash flow over the next three years.

The company has maintained dividend payments for 56 consecutive years and currently offers a dividend yield of 1.69%.

In addition, RTX's BBN Technologies division recently demonstrated a self-healing communications system for military networks under a program funded by the Air Force Research Laboratory.

S&P Global Ratings also revised its outlook on RTX to positive from stable while affirming the company's BBB+ issuer credit rating, citing strong demand for its defense products and commercial aerospace offerings, including engines for the Airbus A320 family.

The Jefferies upgrade adds to already strong analyst support for the stock.

Approximately 74% of analysts covering RTX currently rate the shares a Buy, above the typical 55% to 60% Buy-rating ratio for S&P 500 companies.