LMT - Raytheon downgraded to Hold at Jefferies on cash-flow hurdles

2023-04-20 16:52:30 ET

Raytheon Technologies ( NYSE: RTX ) on Thursday was downgraded to Hold from a prior investment rating of Buy by analysts Jefferies. They said the aerospace and defense company faces challenges in boosting cash flow.

They estimated Raytheon ( RTX ) will reach $7.1 billion in free cash flow by 2025, compared with management’s target of $9 billion.

“With the defense ramp and commercial original equipment ramp largely baked in, we see limited near-term catalysts with the current fiscal-year-two consensus free cash flow yield of 4.5% limiting rerating potential,” Sheila Kahyaoglu, analyst at Jefferies, said in an April 20 report.

Jefferies lowered its price target for Raytheon ( RTX ) to $110 a share from $115 a share, based on a multiple of 18.4 times EPS for 2025.

Raytheon's ( RTX ) stock in the past 12 months has fallen 2%, compared with a 7.4% decline for the Standard & Poor's 500 stock index ( SP500 ).

Seeking Alpha contributor Chris Lau rates Raytheon ( RTX ) as a Buy after defense company Lockheed Martin ( LMT ) posted better-than-forecast results .

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