What Could Spark the Next Big Move In RTX Stock

RTX has shown remarkable rally potential in the past. Notably, it surged over 50% within two months during 2020 and recorded multiple rallies above 30% in short spans, including 2020 and 2022. These historical bursts highlight RTX’s capacity for rapid gains. If similar conditions arise, RTX could experience significant upward momentum, offering substantial opportunities for investors.

Specifically, we see these catalysts:

1. Defense Backlog Conversion & Margin Uplift
2. Commercial Aero Aftermarket Ramp
3. FAA Air Traffic Control Modernization Contract

Catalyst 1: Defense Backlog Conversion & Margin Uplift

• Details: Accelerated revenue recognition from $103B defense backlog, Potential for 50-100bps margin expansion in Raytheon segment,
• Segment Affected: Raytheon
• Potential Timeline: Mid-2026 through 2027
• Evidence: Record $251B total backlog with 1.63 book-to-bill ratio in Q3 2025, Management investing $300M in expanded capacity for munitions and air defense systems,

Catalyst 2: Commercial Aero Aftermarket Ramp

• Details: Sustained high-teens growth in high-margin aftermarket services, Improved free cash flow generation,
• Segment Affected: Pratt & Whitney, Collins Aerospace
• Potential Timeline: Ongoing through 2026
• Evidence: Commercial aftermarket sales up 18% in Q3 2025, Full-year 2025 commercial aftermarket sales guidance raised to ‘low teens’ growth,

Catalyst 3: FAA Air Traffic Control Modernization Contract

• Details: Multi-billion dollar, multi-year revenue stream, Establishes RTX as key partner in critical infrastructure upgrade,
• Segment Affected: Raytheon
• Potential Timeline: Q1 2026 to mid-2028
• Evidence: FAA contract awarded January 2026 to replace up to 612 radar systems, Part of a broader $12.5B congressional plan to overhaul the nation’s air traffic control,

But The Stock Is Not Without Its Risks

Here are specific risks we see:

• Uncontained Liability From Pratt & Whitney GTF Engine Defects
• Deteriorating Working Capital And Cash Flow Quality
• Broad-Based Insider Selling Signals Peak Valuation

Looking at historical drawdown during market crises is another lens to look at risk.

RTX fell roughly 52% in the Dot-Com crash and 53% in the Global Financial Crisis. The Covid dip was similar at 52%. Smaller hits like 2018 and inflation still sliced off 28-33%.

Read RTX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

Reference: Current Fundamentals

• Revenue Growth: 8.8% LTM and 9.4% last 3-year average.
• Cash Generation: Nearly 5.5% free cash flow margin and 10.3% operating margin LTM.
• Valuation: RTX stock trades at a P/E multiple of 37.8

*LTM: Last Twelve Months | If you want more details, read Buy or Sell RTX Stock.

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