Is RTX stock a buy after its alarming 11% weekly drop?

A strong earnings report and an upgraded full-year outlook were supposed to be the kind of reassuring signals that steady a defense stock under pressure. For RTX Corporation, they were not enough. Shares hovered near $174 in late-morning trading today, April 27, barely recovering after Erste Group Bank cut its rating on the stock from buy to hold, the latest sign that investor sentiment has turned cautious despite fundamentals that remain, by most measures, quite solid.

An 11% drop in 5 days and a downgrade to match

The Erste downgrade landed just days after RTX completed one of its steepest short-term selloffs in recent memory. Over just five trading sessions, shares fell 11.3 percent, erasing roughly $30 billion in market capitalization against a backdrop where the S&P 500 actually edged higher by 0.5 percent over the same period. That kind of divergence from the broader market tends to attract attention, and Erste’s decision to move to a neutral stance reflects a view that the recent price drop has not yet created a compelling enough entry point to justify the risks still hanging over the stock.

Today’s session saw RTX trading in a tight range between $173.10 and $176.95, with no meaningful recovery in sight. Notably, the stock dipped below the $177.60 support level that technical analysts had been watching as a potential floor, a development that dims the short-term outlook further. The broader analyst community still leans positive overall, with 13 buy ratings, one strong buy, seven holds and one sell among the analysts tracked by MarketBeat, placing consensus at a moderate buy. But the direction of travel in recent weeks has clearly been toward more caution.

What the first-quarter numbers actually showed

The frustrating part for long-term RTX shareholders is that the underlying business delivered a genuinely strong quarter. First-quarter sales came in at $22.1 billion, a 9 percent increase year over year. Adjusted earnings per share reached $1.78, a 21 percent jump from the same period last year. Management responded by raising its full-year 2026 guidance, now targeting adjusted sales of $92.5 billion to $93.5 billion and adjusted earnings per share of $6.70 to $6.90.

The company’s 3 main business segments all contributed positively: 1. Raytheon posted 10 percent revenue growth, bolstered by sustained demand for land and air defense platforms including Patriot and GEM-T missile systems. 2. Pratt and Whitney delivered 11 percent revenue growth, driven in significant part by a 19 percent surge in commercial aftermarket activity covering parts and aircraft repairs. 3. Collins Aerospace added 5 percent sales growth. The company’s total backlog stood at $271 billion, split between $162 billion in commercial work and $109 billion in defense contracts.

3 threats keeping the stock under pressure

Despite the positive results, 3 factors are complicating the recovery:

1. Tariff costs. RTX has already absorbed approximately $500 million in tariff charges under the International Emergency Economic Powers Act. The company’s chief financial officer told analysts that the firm’s stance on tariffs remains unchanged for now and that any potential refunds are not yet reflected in guidance, meaning there is no upside baked in from that angle.
2. Valuation concerns. RTX shares had performed strongly in the months leading up to the recent drop, and some analysts believe much of the anticipated benefit from rising defense budgets and weapons demand was already embedded in the stock price before it fell. The market may simply be recalibrating to a more realistic level after getting ahead of itself.
3. Sector-wide weakness. RTX is not alone in its struggle. Northrop Grumman fell 5 percent last week despite reporting stronger first-quarter revenue, and defense names including Lockheed Martin, General Dynamics and L3Harris are all trading well below highs reached during the period of peak Iran-related headline risk. The same dynamic appears to be at work across the sector: demand is real and growing, but investor enthusiasm may have priced in the good news too early.

What to watch in the week ahead

Technical analysts see RTX likely oscillating between $170 and $183 over the next five trading sessions, with current momentum pointing to continued sideways or slightly lower action. A sustained move above $183 would be the signal needed to suggest a more meaningful recovery is building, while a breakdown below $170 would risk opening the door to further selling pressure.

With most momentum indicators still leaning bearish despite some oversold readings that hint at relief, the near-term path for RTX depends heavily on whether this week’s broader market catalysts, including major tech earnings and ongoing oil market developments tied to Iran, shift sentiment in a more favorable direction for equities overall.

The fundamental case for RTX over the medium and long term remains intact. A $271 billion backlog does not evaporate overnight. The question, as it always is with defense contractors facing cost headwinds, is how efficiently that backlog converts into actual cash flow under current conditions.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The author and publication are not registered investment advisors and do not provide personalized investment recommendations.