UBS has increased its 12-month price target on RTX Corp. to $208.00 from $199.00 but maintained a Neutral rating after the aerospace and defense contractor posted encouraging fourth-quarter results. Shares of RTX are trading at $201.28, close to a 52-week high of $203.03, and the stock has returned 59.74% over the past year.
According to UBS, demand across RTX’s three principal business units remains strong and the company has made continued progress on margins. Both reported free cash flow for 2025 and the company’s guided free cash flow for 2026 exceeded UBS’s prior expectations, prompting the bank to revise its longer-term cash flow view.
The bank now models 2026 free cash flow for RTX at $8.5 billion. UBS highlighted that core cash flow trends are improving, helping to offset a step-up in capital expenditures. The firm also pointed to management’s actions to reduce the GTF powder metal cash impact, which has increased UBS’s confidence in the company’s pathway to normalized cash conversion.
Over the last twelve months RTX generated $5.24 billion in levered free cash flow while operating with what UBS characterizes as a moderate level of debt. UBS said the backdrop should allow RTX to sustain high single-digit top-line growth while also extending margin gains. Performance in the most recent twelve months underpins that view: revenue rose 9.74% and gross profit margin stood at 20.08%.
Despite the stronger cash outlook and margin momentum, UBS raised its earnings-per-share estimates by roughly 1% on average following the results. The bank regards RTX’s current valuation as reasonable, noting a next-twelve-month EV/EBITDA multiple of 19.7X, which supports its Neutral stance.
Additional company metrics cited in the results include a price-to-earnings ratio of 39.14 and indications from fair-value calculations that the stock appears overvalued. RTX has a long track record of returning capital to shareholders, having paid dividends for 55 consecutive years with increases in each of the last four years.
Quarterly performance and analyst reactions
RTX reported fourth-quarter adjusted earnings per share of $1.55 versus analyst expectations of $1.47. Revenue for the quarter reached $24.2 billion, reflecting 14% organic year-over-year growth. The stronger-than-expected results led several brokerages to move their targets higher.
- RBC Capital raised its price target to $230 while maintaining an Outperform rating.
- Vertical Research Partners increased its target to $227, while expressing skepticism about Pratt & Whitney’s projected aftermarket growth reduction.
- TD Cowen raised its price target to $225, citing the strong quarterly performance.
In program-related news tied to the company, Raytheon, a business within RTX, secured a $193.7 million contract for guided missiles from the U.S. Department of War, with work scheduled to be completed by September 2028.
Financial health and valuation considerations
Financial metrics cited alongside UBS’s note include an overall financial health score of 2.66 with solid momentum measures. UBS emphasizes that improving core cash flow and mitigation of specific cash impacts are key to restoring normalized cash conversion, even as capital spending steps up.
At the same time, valuation signals temper further upside from the bank’s perspective. UBS’s limited lift to EPS estimates and the present EV/EBITDA multiple underlie the Neutral recommendation despite the favorable cash-flow trajectory and margin expansion.
What this means for markets and sectors
UBS’s revision of RTX’s target and its commentary principally reflect developments in the aerospace and defense sector, and in the broader corporate cash-flow and valuation discussion among industrials. The improved free cash flow outlook and contract wins support revenue and margin expectations, while valuation metrics and modest EPS revisions shape analyst positioning.