RTX Stock Slides After Cruising Past Earnings Forecasts, Reaffirming Outlook

RTX shares fell Wednesday, after Raytheon (RTX), a defense giant, surpassed Q1 earnings expectations and reaffirmed the outlook for the full year.

Raytheon Earnings

Results: Raytheon's adjusted earnings increased 6%, from $1.22 to $1.22/share. Revenues jumped 10% to $17.2 billion.

FactSet polled analysts who expected earnings per share to decline 1.7%, to $1.13 on a 7.9% increase in revenue to $16.96 Billion.

Raytheon reported a free cash outflow of $1.383billion for the quarter. This was due in part to $520mn capital expenditures. Raytheon reported a positive free cash flow last year of $37 millions, including $439 million capital expenditures.

In Q1 2022, the backlog of the company reached $180 billion. Of this amount, $109 billion was derived from commercial aerospace while $71 billion came from defense. In Q1 2020, the backlog was $154 billion.

Pratt & Whitney's sales grew 15% to $5.23 Billion, while Collins Aerospace's sales jumped 16 percent to $5.58 Billion. Raytheon Intelligence & Space revenues fell to $3.57 Billion. The revenue from Missiles & Defense increased 4% to $3.67 Billion.

Raytheon has reaffirmed their outlook for the full year of 2023 and expects to earn adjusted earnings ranging between $4.90 - $5.05 per share on sales of $72 - $73 billion. FactSet's projections fall at the upper end, with earnings of $5.01 a share and revenue of $72.38 Billion. Raytheon has reported earnings per share of $4.78 on sales of $67 billion for 2022.

RTX Stock

RTX's stock fell 3.4% Wednesday to 97.68, forming a handle of a cup with handle base on MarketSmith's daily chart. The new pattern is 105.01 points of purchase.

Before Wednesday's trading, shares were at the lower end a zone of buy above a cup-base after breaking out on February 17.

Raytheon's stock fell further below its 10-day average, and lost its 50-day average as well as its 10-week line.

Earnings from LMT

Lockheed Martin (LMT), reported adjusted earnings of $6.43 a share on Thursday. The numbers were flat year-over-year, but sufficient to surpass Wall Street's expectations of a 6 percent decline. LMT's stock exploded after results.

China has blacklisted Lockheed Martin and Raytheon.

Jefferies cut its price target for RTX to 110 from 115 on Thursday, prior to Raytheon's earnings. Sheila Kahyaoglu, an analyst at Sheila Kahyaoglu Research, wrote that the Collins Aerospace division of Raytheon is "well-appreciated and quite solid". Raytheon’s Missiles & Defense division, and its Pratt & Whitney aero engine segment are the two most important questions.

Jefferies believes that Defense is lacking in visibility of growth drivers, as the estimates already include acceleration. Jefferies predicts that Pratt & Whitney will face near-term profitability headwinds. Raytheon's target is $9 billion, while the firm forecasts a free cash flow of $7.1 billion by 2025.