RTX Q2 Beats, Analysts Raise Targets but Execution Risks Persist

What happened

RTX reported better-than-expected Q2 results and raised its full-year outlook, prompting analysts to raise price targets. This reinforces the consensus narrative of a recovery in commercial aerospace and defense. However, at 36x P/E, the stock already discounts Pratt normalization and defense conversion that have not yet materialized in clean data. Key risks remain: elevated PW1100 AOG levels, a $0.5B compensation accrual, and tariff overhangs that could delay cash flow improvement. Until subsequent filings show decisive shipment growth and broader missile awards, the positive sentiment may be ahead of deliverable results.

Implication

Investors should wait for concrete evidence of Pratt shipment acceleration and defense award conversion before adding exposure, as the current valuation leaves little margin of safety. The attractive entry remains around $175, with a trim above $220.

Thesis delta

The Q2 beat and analyst upgrades reinforce the consensus narrative but do not alter the central timing risk. The thesis still hinges on visible Pratt shipment improvement and broader defense awards in the next 6-9 months. No rating change; maintain WAIT with a bias to add on weakness.