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RTX Stock Plunges on Engine Woes Despite Strong Earnings; Technicals Point to Further Downside

  • RTX reported strong Q2 results but the stock plunged due to engine issues that could hurt future cash flow. The stock is testing key support in the low $80s.

  • RTX faces risks related to inspections of its GTF engines, which could divert inventory and hurt cash flow in coming years. This has led to stock downgrades.

  • Valuation metrics for RTX are mixed compared to defense peers. Its growth outlook is also less impressive than competitors.

  • Technicals show a bearish topping pattern in RTX. Losing the mid-$80s support could lead to a measured move downside target in the $50s.

  • I have a neutral rating on RTX. The valuation seems fair but technical momentum is weak. The threat of more negative headlines and stock downgrades persists.

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