RTX Corporation heads into its October 20 results carrying a deepening discount to analyst targets, a stock that has now shed 12% over the past month, and a market that is not yet pressing the short side in any meaningful way.
The slide continued this week. RTX closed at $186.94 on September 29, down another 2.1% on the week and off nearly 12% over the past month. That extends the retreat flagged in last week's note, when the stock was at $190.99. The mean consensus target is $234, implying roughly 25% upside from here. That gap has widened materially as the stock fell, not because the Street has grown more bullish but because targets have not yet caught up with the price action. Most of those targets were set in the aftermath of the strong Q2 print, when the stock jumped 9% in a single session. The Q2 bull case was clear: 14% sales growth, organic revenue up 16%, adj. EPS of $1.89, and a backlog that hit $289 billion, up 22% year-on-year. The subsequent selloff has moved faster than analyst revisions.
The lending market offers no evidence of organised short-side conviction. Short interest on RTX is just 1.05% of the free float, and while it has crept up 7% over the past week to around 14.1 million shares, it fell by nearly a quarter over the past month. The borrow market is extraordinarily loose: availability is at 9,999%, meaning shares to borrow dwarf the existing short position by a ratio of roughly 100 to one. Cost to borrow has fallen 22% on the week to 0.34%, well within routine territory. The ORTEX short score sits at 31.2, a benign reading with no meaningful move over the past two weeks. This is not a stock where short sellers are pressing.
Options positioning is similarly relaxed. The put/call ratio came in at 0.77 on September 29, slightly below its 20-day average of 0.79, putting the z-score at negative 0.92. Call volume is running a touch above the recent norm. With earnings three weeks out, that absence of elevated put demand is notable. After the last Q2 release, RTX moved 9.2% higher in a single session and added another 10% over the five days that followed. The last comparable print before that produced a near-flat day-one reaction but an 12.4% five-day gain. The Street is not paying up to hedge the October 20 print, at least not yet.
On the analyst side, the picture has shifted only modestly since the September 23 note. Bernstein's Douglas Harned trimmed his target again to $223 from $232, keeping a Market Perform rating, the most recent move to acknowledge the pullback explicitly. The rest of the Street has stayed constructive without much fresh action: TD Cowen holds a Buy at $240, RBC Capital carries an Outperform at $250, and Morgan Stanley remains Overweight. The bull case rests on broad commercial aerospace and defense demand, aftermarket recovery, and management's raised full-year guidance on sales, adj. EPS, and free cash flow. Bears point to Pratt and Whitney's GTF execution risk, tariff headwinds, and a scenario where free cash flow comes in near $10.2 billion against a 20x earnings multiple, leaving limited buffer if cycle conditions soften.
Valuation has drifted in the same direction as the price. The PE multiple has compressed by roughly 2.9 turns over the past 30 days, now at 24.3x. EV/EBITDA is off 0.18 turns over the same period to 16.6x. Neither move represents distress, but both reflect a re-rating that the sell side has not fully responded to yet. The dividend factor score ranks in the 85th percentile, providing some ballast in a sector rotation. Among close peers, LMT fell 1.9% on the week and GD dropped 3.2%, suggesting RTX's 2.1% weekly decline was slightly better than the worst of the group, though the sector as a whole continues to face pressure.
The key watch point from here is simple: whether analyst targets begin to migrate lower before October 20, or whether the earnings print resets the trade.
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