RTX (RTX) is very well-positioned to benefit from multiple, positive, strong macro trends, including higher defense spending globally and increased demand for missile defense. Also positively for RTX stock, the defense giant recently posted stellar fourth-quarter financial results, and Bank of America raised its price target on the name on February 2, while the stock’s valuation remains attractive.
As a result of these points, I believe that some investors should consider buying the shares.
Multiple, Powerful, Positive Catalysts
In a previous column, I predicted that RTX would benefit from ” increasing outlays on missiles” and “the strong demand for commercial airplanes.”
Those forecasts are proving to be accurate. In December, the company obtained a large, $1.7 billion deal for four of its Patriot anti-missile systems from Spain, and in November RTX received a $1.25 billion contract from Israel to provide the country with Tamir surface-to-air missiles. These projectiles will be used by Israel’s Iron Dome missile-defense system, Iron Dome, “and its U.S. variant, SkyHunter, for the Marine Corps’ Medium-Range Intercept Capability (MRIC) program,” RTX reported.
Meanwhile, the firm continues to be poised to benefit from President Donald Trump’s $175 billion missile-defense initiative, Golden Dome, and from the Pentagon’s increased emphasis on hypersonic weapons. Leaving RTX well-positioned to get a lift from the Defense Department’s initiative in the latter area, the contractor in October 2024 obtained $73 million from the Air Force to prepare to build the Hypersonic Attack Cruise Missile.
And speaking on the company’s Q4 earnings call, held on January 27, RTX CEO Chris Calio noted that America’s “NATO allies, which today spend around 2% of GDP on defense, have committed to increasing their core defense spending to approximately 3.5% of GDP by 2035.” Moreover, in “the Asia Pacific and Middle East regions, defense budgets are projected to grow at an average of 3% to 4% annually over the next five years,” the CEO reported. And finally, President Donald Trump has proposed a record $1.5 trillion Pentagon budget for fiscal 2027, representing a roughly 50% increase above FY26 levels.
All of these military-spending increases should meaningfully boost RTX’s top and bottom lines in the coming years.
Turning to the company’s commercial-airplane business, the unit’s backlog soared 29% in 2025, “driven by growing aircraft production rates, and resilient passenger air travel,” Calio explained. The CEO added that “Orders and commitments during the year included 1,500 GTF engines, and over 2,400 Pratt Canada engines.” Additionally, $105 billion of aircraft parts made by its Collins subsidiary are out of warranty, leaving the unit poised to generate a great deal of revenue from repairs in the coming years.
Outstanding Q4 Results
RTX’s sales climbed 14%, excluding acquisitions and divestments, versus Q4 of 2024 to $24.2 billion, while its segment operating profit, excluding certain items, advanced 9% year-over-year to $2.9 billion. And extremely impressively, RTX’s operating cash flow soared 167% year-over-year to $4.165 billion.
Bank of America is Bullish on RTX Stock
On February 2, the bank increased its price target on RTX to $230 from $215. It expects RTX to benefit from “strong demand tailwinds” and believes that RTX’s defense business is embarking on “a period of reignited growth.” It kept a Buy rating on the shares.
Valuation and the Bottom Line on RTX Stock
RTX has a forward price-earnings ratio of 29.6 times. Given the company’s incredible growth and strong, positive catalysts, this valuation is quite attractive.
In light of RTX’s very large size and stable businesses, its stock is well-suited for conservative investors and value investors.
This article is intended to be informational only; it is not financial advice.
