UBS RTX Price Target Upgrade: Investment Analysis

Based on my comprehensive analysis of the available data, I will provide a detailed report on UBS’s RTX price target upgrade and its implications for the aerospace and defense sector.

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UBS has raised RTX Corporation’s (Raytheon Technologies) 12-month price target from $199 to $208, representing an approximately 4.5% increase. This upgrade reflects the firm’s confidence in RTX’s robust demand profile across its three core business segments: Collins Aerospace, Pratt & Whitney, and Raytheon Defense. The upgrade coincides with RTX’s exceptional Q4 2025 and full-year 2025 financial results, which demonstrated strong growth across commercial and defense markets [0][1].

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Pratt & Whitney emerged as the primary growth driver, with Q4 2025 sales reaching $9.496 billion, representing a remarkable

. The segment’s growth was fueled by three key demand pillars [0]:

Demand Category	Q4 2025 Growth	Key Drivers
Commercial OE (Original Equipment)	+28%	Higher volume and favorable mix in large commercial engines
Commercial Aftermarket	+21%	Increased volume and heavier content in large commercial engines and Pratt Canada
Military	+30%	Higher F135 production volume and increased sustainment across F135 and F100 platforms

The commercial aerospace recovery continues to accelerate as global air travel demand rebounds to pre-pandemic levels and airline fleet expansion accelerates. Pratt & Whitney’s Geared Turbofan (GTF) engine program remains a significant growth catalyst, though the company continues to address the previously disclosed powder metal condition affecting portions of the GTF fleet.

Collins Aerospace reported Q4 2025 sales of $7.736 billion, up

, with adjusted organic growth significantly higher when excluding divestitures. The segment demonstrated balanced growth across all categories [0]:

• Commercial OE
  : +9% driven by higher volume on widebody and narrowbody platforms
• Commercial Aftermarket
  : +13% growth in provisioning, parts, and repairs
• Defense
  : +2% increase across multiple programs

Collins Aerospace’s integrated systems approach positions it favorably for next-generation aircraft programs and retrofit opportunities across global commercial and military fleets.

Raytheon reported Q4 2025 sales of $7.657 billion, representing

. The segment’s performance was driven by [0]:

• Land and Air Defense Systems
  : Higher volume on Patriot and GEM-T missile systems
• Naval Programs
  : Increased volume on Evolved SeaSparrow Missile and Tomahawk cruise missiles
• Operating Margin Expansion
  : Adjusted operating profit margin improved to 11.6% from 10.2%, reflecting improved productivity and favorable program mix

The segment’s adjusted operating profit increased

, demonstrating effective execution on a growing defense backlog.

RTX ended 2025 with a record

, comprising:

• $161 billion commercial backlog
• $107 billion defense backlog

This substantial backlog provides significant revenue visibility and supports UBS’s confidence in RTX’s ability to sustain growth momentum through 2026 and beyond [0].

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RTX’s Q4 2025 and full-year 2025 results exceeded market expectations, validating UBS’s optimistic outlook [0]:

Metric	Q4 2025	YoY Change	FY 2025	YoY Change
Revenue	$24.24B	+12%	$88.6B	+10%
Adjusted EPS	$1.55	+1%	$6.29	+10%
Free Cash Flow	$3.2B	Strong	$7.9B	+75%
Operating Cash Flow	$4.2B	+167%	$10.6B	+48%

The company has provided FY 2026 guidance that projects continued growth:

• Revenue
  : $92.0 - $93.0 billion (5-6% organic growth)
• Adjusted EPS
  : $6.60 - $6.80
• Free Cash Flow
  : $8.25 - $8.75 billion

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UBS’s upgrade reflects broader positive sentiment toward the aerospace and defense sector, supported by several structural demand drivers [2][3]:

1. Commercial Aviation Recovery
   : Global air traffic has fully recovered, driving demand for new aircraft and aftermarket services. Fitch Ratings has improved its outlook for global aerospace & defense in 2026, citing supply chain improvements enabling higher production rates [3].

2. Defense Spending Momentum
   : Geopolitical tensions and increasing global security concerns continue to drive defense procurement growth. The U.S. Department of Defense’s focus on accelerating weapons production plays to RTX’s strengths in missile systems, air defense, and military engines.

3. Integrated Platform Strategy
   : RTX’s three-segment structure provides diversified exposure to both commercial and defense markets, reducing concentration risk and providing multiple growth vectors.

RTX’s investment thesis is supported by several competitive advantages:

Advantage	Description
Scale & Diversification	World’s largest aerospace and defense company with $88.6B in annual revenue
Technology Leadership	Next-generation capabilities in propulsion, defense systems, and aerospace technologies
Global Supply Chain	Extensive supplier network with significant production capacity expansion planned
Backlog Visibility	$268B backlog provides multi-year revenue visibility

Investors should monitor several risk factors [0]:

1. Regulatory & Legal
   : Ongoing DOJ and SEC investigations related to historical conduct
2. Execution Risk
   : Production ramp-up challenges and supply chain constraints
3. GTF Fleet Issues
   : Continued management of the powder metal condition affecting GTF engines
4. Defense Policy
   : Potential policy changes affecting U.S. defense spending priorities

Based on UBS’s upgrade and the underlying fundamentals, the following investment considerations apply:

Factor	Assessment	Implication
Valuation	P/E of 40.21x (TTM)	Premium valuation justified by growth and backlog
Analyst Consensus	Buy (65.4% of analysts)	Strong institutional support
Price Target Upside	Current price ~$201 vs $208 target	~3.5% upside with catalysts ahead
Sector Trend	Improving outlook for 2026	Favorable relative to broader market

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• Top-left: Revenue by segment showing Pratt & Whitney’s dominant position
• Top-right: Year-over-year growth rates highlighting Pratt & Whitney’s 25% growth
• Bottom-left: Key demand drivers by category showing commercial OE and military strength
• Bottom-right: 2025 actual vs 2026 guidance demonstrating continued growth trajectory

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UBS’s price target upgrade from $199 to $208 for RTX Corporation reflects the firm’s recognition of sustained strong demand across the company’s commercial aerospace and defense businesses. The primary demand drivers—commercial OE growth (particularly in large commercial engines), robust commercial aftermarket activity, and increasing military production—collectively support RTX’s growth trajectory.

For investors considering the aerospace and defense sector, RTX’s upgrade signals broader sector optimism as commercial aviation recovers and defense spending remains elevated. The company’s record $268 billion backlog, expanding free cash flow generation, and diversified business model position it favorably for continued growth. However, investors should balance these positives against regulatory, execution, and policy risks that could impact future performance.

The sector’s improving outlook for 2026, as noted by rating agencies like Fitch, suggests that RTX’s performance may be indicative of broader industry trends. Investors with a constructive view on aerospace and defense fundamentals may find RTX and comparable companies attractive options for exposure to this structurally improving sector.

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[0] RTX Corporation SEC 8-K Filing - Q4 2025 Results (January 27, 2026). https://www.sec.gov/Archives/edgar/data/101829/000010182926000003/rtx-20260127.htm

[1] Investing.com - “RTX stock price target raised to $208 from $199 at UBS on strong demand” (2025). https://www.investing.com/news/analyst-ratings/rtx-stock-price-target-raised-to-208-from-199-at-ubs-on-strong-demand-93CH-4469738

[2] Harris Williams - “Outlook 2026: Aerospace, Defense & Government Services” (2025). https://www.harriswilliams.com/our-insights/adg-2026-industry-outlook-trends-aerospace-defense-government-services

[3] Fitch Ratings - “Global Aerospace & Defense Outlook Improving for 2026” (December 2025). https://www.fitchratings.com/research/corporate-finance/global-aerospace-defense-outlook-improving-for-2026-08-12-2025