RTX Lifts Forecast for Third Time This Year on Record $340B Backlog

What happened

RTX reported third-quarter results with over $81 billion in new commercial and defense awards, pushing its total backlog to a record $340 billion. The company raised its full-year forecast for the third time this year, citing strong demand across aerospace and defense. This marks a significant acceleration from the $289 billion backlog at the end of Q2 2026, reflecting robust order intake, particularly in missile defense and commercial aftermarket. However, the previous concerns about supply-chain disruptions, tariffs, and Pratt & Whitney MRO throughput capacity remain unchanged. The market is likely to view the update positively, but valuation is already stretched at ~38x earnings, leaving little room for execution missteps.

Implication

Investors should wait for evidence that the expanded backlog converts into higher free cash flow and margins before adding; a pullback toward the $195-$200 range would offer a more attractive entry, while a sustained break above $235 would require confirmation of faster throughput and delivery execution.

Thesis delta

The demand side of the thesis strengthens further with the record backlog and third guidance raise, but the core uncertainty—conversion of backlog into cash—remains the primary risk. The higher backlog raises the stakes for operational execution, especially in Pratt aftermarket throughput and Raytheon defense deliveries. We maintain our WAIT rating until we see concrete evidence of improved conversion and free cash flow acceleration.