There are few companies who are better positioned to capitalize on the global increase in defense spending than RTX Corp. The owner of Raytheon, it’s the largest aerospace and defense business in the world.
Recently, RTX posted its earnings for the third quarter1 of 2025 and they were generally very strong, with the company beating estimates for both sales and earnings per share and increasing its guidance for the full year. This beat-and-raise was well received on Wall Street and led to several firms increasing their price targets for the stock.
Strong Q3 Earnings
For Q3, RTX posted sales of $22.5 billion, up 12% year on year, and comfortably ahead of the consensus forecast2 of $21.3 billion. Adjusted earnings per share came in at $1.70, up 17%, and well ahead of analysts’ estimate of $1.41.
Free cash flow for the period amounted to $4.0 billion, up 104% year on year. This enabled the company to pay down $2.9 billion worth of debt while returning $0.9 billion to shareholders.
At the end of the period, the company had a backlog of $251 billion. Of this, $103 billion was defense related.
Higher Defense Volumes
Zooming in on the company’s defense segment, Raytheon, it generated sales of $7.0 billion for the quarter, up 10% year on year. Growth here was driven by higher volume on land and air defense systems (including Patriot systems) as well as higher volume on naval programs.
On the earnings call, management noted that during Q3, the company booked over $8 billion worth of orders for munitions. This included $2.1 billion in orders for its AMRAAM air-to-air missiles, the largest order in the 30-year history of this program3.
Guidance Raised
Looking ahead, RTX raised both its revenue and earnings guidance for 2025. It now expects adjusted sales of $86.5 to $87.0 billion, up from $84.75 to $85.5 billion, and adjusted EPS of $6.10 to $6.20, up from $5.80 to $5.95.
Increased Price Targets
On the back of this higher guidance, several Wall Street firms raised their price targets4 for the stock. For example, Morgan Stanley increased its target price to $215 from $180 while Susquehanna lifted its price target to $205 from $175.
Given that the defense stock currently trades near $180, these firms clearly see substantial upside in the medium term. In light of this bullish analyst sentiment, RTX could be a stock to watch in the months ahead.
Footnotes:
1RTX Newsroom, RTX Reports Q3 2025 Results, as of October 21, 2025
2CNBC, Defense companies raise 2025 outlooks on higher demand, as of October 21, 2025
3Investing.com, Earnings call transcript: RTX beats Q3 2025 forecasts, stock surges, as of October 21, 2025
4Investing.com, Rtx Corp (RTX), as of October 28, 2025
