RTX Corporation (RTX) surged 7.3% on July 23 following its second-quarter 2026 earnings release, even as the S&P 500 declined 1.2% on the same day.
That single-day outperformance marked one of the sharpest divergences for a company of RTX’s scale in recent memory, drawing immediate attention from Wall Street analysts.
Morgan Stanley responded swiftly, raising its price target on RTX to $240 from $220 while reiterating its Overweight rating on the defense and aerospace giant.
With RTX shares trading at approximately $215, the revised price target implies roughly 12% upside from current levels, according to Yahoo Finance data.
Morgan Stanley framed its updated thesis around a single compelling phrase: “Stronger for Longer Across Commercial Aerospace and Defense.”
RTX posted quarterly sales of $24.7 billion, representing 14% year-over-year growth and 16% on an organic basis, with strength spread across all three business segments.
Adjusted earnings per share came in at $1.89, up 21% year over year, adding further weight to the bullish case Morgan Stanley had been building since its first-quarter note.
Full-year 2026 guidance was raised across every meaningful financial metric, with adjusted sales now expected between $95 billion and $96 billion, up from the prior range of $92.5 billion to $93.5 billion.
Adjusted EPS guidance was lifted to $7.10 to $7.25 from $6.70 to $6.90, and free cash flow guidance was raised to $8.50 to $8.75 billion from $8.25 to $8.75 billion.
“Our backlog is up 22% year-over-year,” said RTX Chairman and CEO Chris Calio in the earnings release, adding that “RTX is exceptionally well positioned to drive continued growth.”
Morgan Stanley identified Raytheon as the largest source of incremental earnings upside, a conclusion it has held consistently across both its Q1 and Q2 notes on the company.
Raytheon’s backlog grew approximately 16% sequentially in Q2 to $86 billion, generating an impressive 2.4x book-to-bill ratio that signals sustained demand well into future quarters.
International awards more than doubled in the first half of 2026, surpassing $10 billion, with international customers now representing approximately 48% of Raytheon’s total backlog.
Notably, RTX’s five missile defense framework agreements are not yet reflected in that backlog figure, according to Morgan Stanley’s note, suggesting additional upside remains unaccounted for.
On the commercial aerospace side, maintenance, repair, and overhaul output increased by more than 40%, while turnaround times improved by 23% and commercial aftermarket sales grew 25%.
The aircraft-on-ground improvement was cited as the single most important data point for assessing Pratt and Whitney’s medium-term earnings power going forward.
At Collins Aerospace, structural cost-reduction efforts are expected to push margins toward 19% to 20% over time from a current level of approximately 17%, building a clear earnings bridge without requiring new demand assumptions.
Morgan Stanley raised its 2026 adjusted EPS estimate to $7.25 from $6.90, and lifted its 2027 and 2028 estimates to $7.85 and $8.50, respectively.
The combination of strong execution, expanding backlogs, and rising guidance makes RTX one of the more compelling large-cap defense names heading into the second half of 2026.
