Why Pratt & Whitney's GTF Engine Issues Could Impact RTX Cash Flow Through 2025? Analyst Downgrades Stock
Portfolio Pulse from Nabaparna Bhattacharya
RBC Capital Markets analyst Ken Herbert has downgraded RTX Corporation (NYSE:RTX) to Sector Perform and lowered the price target to $82 from $105. This follows RTX's update on the impact to the Pratt & Whitney Geared Turbo Fan (GTF) engine fleet due to a rare condition in the powder metal used to manufacture certain engine parts. RTX now anticipates a ~$3 billion FCF impact from 2023 through 2025, with ~80% of this going toward customer concessions. The analyst warns of continued risks to the FCF outlook from the execution of the engine repairs and the customer concessions.
September 12, 2023 | 6:16 pm
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RTX Corporation has been downgraded by RBC Capital Markets due to issues with its Pratt & Whitney GTF engine. The company anticipates a ~$3 billion FCF impact from 2023 through 2025, with ~80% of this going toward customer concessions.
The downgrade by RBC Capital Markets and the lowering of the price target is likely to negatively impact investor sentiment towards RTX. The anticipated ~$3 billion FCF impact from 2023 through 2025 due to issues with the Pratt & Whitney GTF engine could also negatively impact the company's financial performance and stock price in the short term.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100