Wells Fargo Raises RTX Price Target to $151, Boosts Interest

Wells Fargo has raised the price target for RTX stock to $151, maintaining an 'overweight' rating. This represents a significant premium to the current price and poses questions about valuation amidst challenges in the defense sector.

Date: 09-01-2025

AI Rating: 7

Overview of RTX's Position
Recently, a Wells Fargo analyst has raised the price target for RTX stocks from $140 to $151. This change reflects a 31% premium over the current price, indicating a bullish outlook which could influence stock prices positively.
Free Cash Flow (FCF)
The Wall Street consensus expects RTX to generate approximately $8.4 billion in free cash flow (FCF) for 2026, which is a critical metric for assessing the firm's financial health. The current market cap of $153 billion gives RTX a price-to-FCF ratio of 18.2, which is favorable compared to the industry standard. The Wells Fargo analyst’s perspective supports this with a similar focus on earnings, although specific earnings data was not provided.
Market Comparison
It was noted that some of RTX's aerospace and defense peers currently trade at higher multiples, suggesting that if RTX reaches the new target of $151, its price-to-FCF multiple would be near 24 times in 2026. This could make RTX appear overvalued if the wider market trends towards lower multiples.
Challenges Ahead
The report points out the potential risks in the defense sector, noting the U.S. government’s push for fixed-price development programs, which have historically impacted profitability. Additionally, RTX's defense segment has faced challenges tied to Boeing and Airbus's production numbers. If the growth projections revert to the traditional low single-digit rates, the elevated valuation may not be justified, potentially leading to a price adjustment.
Conclusion
Overall, while the raised price target reflects confidence from Wells Fargo, investors should remain cautious due to potential sector-wide challenges. The anticipated FCF figures appear promising, but prevailing market conditions could significantly impact RTX's stock performance moving forward.

Stocks: RTX BA EADSY