RTX's Strong Backlog and Pricing Power Mitigate Defense Risks, Analysts Forecast Big 2025 Upside

RTX Corporation (NYSE: RTX), a global leader in aerospace and defense, has delivered a strong performance in Q4 2024, capping off a year of double-digit growth in key segments. The company reported robust revenue expansion, margin improvement, and a record backlog of $218 billion, reflecting sustained demand across its commercial aerospace and defense businesses. With a favorable market environment and continued investment in innovation and efficiency, RTX remains well-positioned for growth in 2025 and beyond.

RTX's strong backlog and pricing power position the company to mitigate defense-related risks in the near term. The company's record backlog of $218 billion, with $93 billion in defense orders, ensures revenue visibility for years ahead, reducing the impact of any short-term fluctuations in defense spending or program delays. Additionally, RTX's dominant market position and strong brand allow it to maintain pricing power, even in challenging market conditions. For instance, Pratt & Whitney's ongoing engine maintenance and replacement program poses near-term financial headwinds, but the company's pricing power helps offset these challenges.

RTX's diversified business model, balanced exposure to commercial aerospace and defense, and operational efficiency also contribute to its ability to navigate near-term defense-related risks. The company's commercial aftermarket sales surged 15% in Q4 2024, while defense revenue grew 10% organically. RTX's disciplined execution and operational efficiency enabled solid margin expansion across all segments, despite challenges in the supply chain and costs associated with the powder metal issue.

Analysts' forecasts for 2025 upside align with RTX's strategic priorities and operational performance. BofA Securities and RBC Capital Markets both expect organic sales growth of 4% to 6% in 2025, reflecting the strong demand for RTX's products and solutions. Segment operating profit growth of 10% to 13% is also expected, as RTX continues to improve cost control and operational efficiencies. Adjusted EPS growth of 5% to 7% is forecasted, reflecting the potential of RTX's strategic priorities to drive top-line and bottom-line growth. Free cash flow is expected to reach $7.0 to $7.5 billion in 2025, reflecting RTX's focus on operational efficiency and capital deployment.



In conclusion, RTX's strong backlog and pricing power position the company to mitigate defense-related risks in the near term. Analysts' forecasts for 2025 upside align with RTX's strategic priorities and operational performance, reflecting the company's strong demand, margin improvement, innovation, free cash flow growth, and commitment to shareholder returns. As RTX enters 2025 with a solid foundation for future growth, investors can expect continued success from this global aerospace and defense leader.