RTX Corp (NYSE:RTX, XETRA:5UR) delivered a strong first-quarter 2026 performance driven by broad-based demand across its defense and commercial aerospace businesses, though investor concerns around the commercial aviation outlook weighed on the stock, according to Bank of America.
The aerospace and defense group posted solid growth across its key segments, with strength in defense operations and continued momentum in aftermarket and original equipment demand at Pratt & Whitney and Collins Aerospace.
However, shares retreated after the print as investors focused on potential softness in commercial aerospace demand.
Bank of America said it is reiterating its “Buy” rating on RTX, arguing the sell-off was overdone given resilient underlying demand trends. The firm also maintained its price objective of $230, based on an 18x multiple of 2027 estimated EV/EBITDA, down from a prior 21x multiple.
“We see the sell-off as overdone given demand in Aero remains unmoved,” the bank wrote. “Growth for RTX's Raytheon segment continues to accelerate as demand for munitions and sensors continues to outpace supply.”
In defense, Bank of America highlighted accelerating growth in RTX’s Raytheon segment, where demand for munitions and sensors continues to exceed supply. The firm said ongoing global conflicts are driving near-term replenishment needs, but it expects sustained demand through the end of the decade as the US and allied nations rebuild stockpiles.
Investors have been closely watching expected demand tied to a February 4 munitions framework agreement, though contracts have not yet been finalized. The firm also pointed to the FY2027 Presidential Budget Request as an indication of the scale of potential future munitions spending.
Looking ahead, analysts believe that any softness in the commercial market could be partially offset by structural dynamics in engine demand, including the relatively young installed base of geared turbofan (GTF) aircraft. They also pointed to potential upside from the upcoming GTF Advantage engine, which is expected to enter service in the second half of 2026.