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Jefferies Lifts RTX to Buy, Citing Margin Runway and Higher Cash-Flow Outlook
The Apex Times

THE APEX TIMES

Business/The Apex Times/Jun 7, 9:27 PM EDT

Jefferies Lifts RTX to Buy, Citing Margin Runway and Higher Cash-Flow Outlook

RTX shares rose after Jefferies analyst Sheila Kahyaoglu upgraded the aerospace and defense company, setting a higher price target as the firm forecasts improvements across Collins Aerospace, Pratt & Whitney and Raytheon.

By The Apex Times Newsroom3 min readAI-assisted Apex article

RTX Corp. (RTX) climbed in early trading Thursday, June 4, 2026, after Jefferies analyst Sheila Kahyaoglu upgraded the aerospace and defense contractor from Hold to Buy. Jefferies also raised its price target to $220 from $210, a change that contributed to a reported 3.9% stock gain in the opening move.

In its upgrade note, Jefferies said it expects RTX to benefit from a margin expansion path driven by operational improvements at Collins Aerospace, pricing gains tied to Pratt & Whitney original equipment (new engine deliveries) and aftermarket returns from the GTF engine portfolio. The firm lifted its earnings per share estimates for 2026 through 2028 by about 5% on average and framed the valuation around 18.5 times 2027 EBITDA (earnings before interest, taxes, depreciation and amortization) and a 3.6% free cash flow yield.

For the defense side, Jefferies pointed to Raytheon’s exposure to sensors and effectors, forecasting that these areas can grow at an 8% compound annual growth rate through 2030 and support defense margins of 14% or higher. Jefferies also projected more than $9 billion in discretionary free cash flow over the next three years, suggesting it sees room for financial flexibility such as debt reduction, dividends, or share repurchases.

The upgrade landed after RTX reported strong early performance for 2026. In an April 21, 2026 earnings release, RTX said first-quarter 2026 sales were $22.1 billion, up 9% versus the prior year and up 10% organically, with adjusted EPS of $1.78 up 21%. The company reported free cash flow of $1.3 billion and backlog of $271 billion, including $162 billion of commercial and $109 billion of defense. RTX also raised its full-year outlook for adjusted sales to $92.5 billion to $93.5 billion, adjusted EPS to $6.70 to $6.90, and confirmed free cash flow of $8.25 billion to $8.75 billion.

RTX’s business structure matters for the bull case Jefferies is making. The company operates through three units: Collins Aerospace, Pratt & Whitney and Raytheon. Collins Aerospace supplies advanced structures, avionics, interiors and mission systems for commercial, regional and military customers. Pratt & Whitney designs, manufactures and services aircraft engines and auxiliary power systems. Raytheon is focused on defense systems intended to help nations deter aggression and defend allies. Jefferies’ view ties the expected improvement in earnings power to different drivers across those segments rather than a single catalyst.

Still, the jump in the stock does not automatically mean those margin and cash-flow assumptions will be met. The upgrade-related forecasts were issued by Jefferies, and RTX did not issue new guidance in the immediate wake of the rating change in the materials reviewed here. The company typically does not comment on individual analyst ratings, so investors will need to look to upcoming earnings updates for confirmation that operating results align with the path outlined in the note.

Why It Matters

  • A Street upgrade can quickly shift expectations for how quickly RTX margins and cash generation might improve.
  • Jefferies’ underwriting focuses on segment-level drivers, so future quarterly disclosures on Collins, Pratt & Whitney and Raytheon will be watched closely.
  • The defense margin and sensor-and-effector growth thesis highlights how analysts are valuing RTX’s Raytheon mix relative to broader prime defense peers.
  • Backlog and free cash flow guidance from RTX provide a near-term scoreboard for whether the upgrade thesis is tracking in real results.

Sources

Key Facts

  • On Thursday, June 4, 2026, RTX shares rose early after Jefferies analyst Sheila Kahyaoglu upgraded RTX from Hold to Buy.
  • Jefferies raised its RTX price target to $220 from $210.
  • Jefferies said it expects margin expansion supported by operational improvements at Collins, pricing gains at Pratt & Whitney and GTF aftermarket returns.
  • Jefferies projected Raytheon defense margins of 14% or higher and forecast that sensors and effectors can grow at an 8% compound annual growth rate through 2030.
  • RTX reported Q1 2026 sales of $22.1 billion, adjusted EPS of $1.78, free cash flow of $1.3 billion, and backlog of $271 billion.
  • RTX confirmed full-year 2026 free cash flow guidance of $8.25 billion to $8.75 billion and raised its adjusted EPS outlook to $6.70 to $6.90.

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Jefferies Lifts RTX to Buy, Citing Margin Runway and Higher Cash-Flow Outlook | The Apex Times