RTX Corporation enters the week in reverse: shorts who piled in last week are now covering, yet the stock is still sliding — the opposite of the divergence flagged in the May 13 note.
The short interest story has flipped materially since last week's note. Short interest fell 8.6% over the past five days to 1.07% of the free float — unwinding a meaningful portion of the 15.4% weekly build reported on May 13. The absolute level is now back below where the surge began. That reversal looks orderly rather than forced: availability remains completely unconstrained, cost to borrow is just 0.38% annually despite a 40% week-on-week uptick, and the ORTEX short score has drifted slightly lower to 30.0 from 30.7 a week ago. The lending market is not creating any friction here. The borrow cost move is worth noting in isolation — it doubled from 0.18% on May 18 to 0.38% on May 19 — but at these absolute levels it remains well inside the noise band for a large-cap name.
Options traders have stayed close to neutral throughout the week. The put/call ratio of 0.66 is a fraction below its 20-day average of 0.69 and a z-score of -0.45 puts it roughly half a standard deviation below that mean — not a directional signal in either direction. The 52-week range runs from 0.40 to 0.91, so current positioning is unremarkable: neither defensive nor notably bullish. Taken together with the short covering, the options market is consistent with a positioning reset rather than a fresh directional view.
The price action is where the tension lives. RTX fell 2.5% on the week to $174.49 and is down 11.2% over the past month — a meaningful drawdown for a name that was trading near $205 in February. The sell-off has pulled the P/E multiple to around 24.4x, down over three points from a month ago, and the price-to-book has compressed to 3.3x. The consensus mean price target of $215.27 now implies roughly 23% upside from current levels. The most recent analyst moves, from late April, were uniformly in one direction: Morgan Stanley trimmed its Overweight target from $235 to $220, UBS cut its Neutral target from $209 to $199, and Jefferies reduced its Hold target from $225 to $210. All maintained their ratings — the Street trimmed numbers after the Q1 miss but did not downgrade. With the analyst recommendation divergence factor scoring in the 99th percentile, the gap between where the Street has RTX priced and where it is trading is unusually wide.
The fundamental backdrop helps explain that gap. The bull case rests on 9% organic sales growth, strong GTF and V2500 commercial aftermarket demand, and what has been a record-beating top line. The bear case focuses on GTF new-engine economics — RTX is losing approximately $1 million per new GTF delivery — and on slower-than-expected recovery in parts of commercial aerospace compounded by defense contract timing. The Q1 earnings print on April 21 delivered a sharp reminder of the bear case: the stock fell 7.6% that day and extended to a 10.3% five-day loss. The subsequent event on April 30 generated a more modest 0.7% one-day move and a 2.3% five-day recovery — suggesting the initial shock was absorbed, but conviction in a recovery has been limited.
Closest peers offer some relative context. NOC slipped just 0.4% on the week while LMT added 1.1%, both holding up considerably better than RTX's 2.5% decline. VSEC was the clear outlier in the group, falling 12.9% on the week — though that reflects name-specific issues rather than sector-wide pressure. The relative underperformance of RTX against its most correlated peers has been a theme since the April earnings miss and has not yet resolved.
What to watch next is whether the short covering that began this week continues as the stock approaches the April post-earnings lows, or whether fresh shorts re-enter on any relief rally — the pace of that rotation will indicate whether the May short build was a temporary tactical position or the start of a more sustained directional view on GTF profitability.
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