Rtx Corp (NYSE:RTX) was cut to Underperform from Neutral with a new price target of $75, down from $95 per share at BofA on Thursday.
In a note to clients, analysts revealed they are cutting the stock due to increased geared turbofan (GTF) related risks in the near term.
"Following recent geared turbofan (GTF) developments, Raytheon's stock slid significantly, closing down 9.48% after three days of trading (vs. the S&P 500 flat). While some may think RTX is now a 'value' investment, we advise caution as we see significant near-term risks," they warned.
"We think RTX will underperform our coverage universe until there is a clearer understanding of the necessary fixes, customer concessions and even organizational changes in the wake of this egregious manufacturing oversight," they added.
The analysts also noted several other near-term risks, including higher-than-expected customer concessions, the increased scope of engine types impacted, the increased scope of subcomponents impacted, incremental reputational damage to RTX's management team and brand, and the restructuring risk at RTX's legacy defense business.