‘everything is marching exactly as we expected’

Shares of Raytheon Technologies Corp (NYSE: RTX) are roughly flat this morning even after the aerospace and defence conglomerate reported a more than 100% year-on-year growth in its fourth-quarter net income.

Here’s why Raytheon stock is down on Tuesday

Shareholders are partly being cautious on the revenue that came in slightly short of the Street expectations. But CEO Greg Hayes said on CNBC’s “Squawk on the Street”:

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Commercial aerospace markets are about 80% of what they were pre-pandemic. We see that recovery will continue throughout 2023. Our commercial aftermarket was up 15% in Q4. Everything is marching exactly as we had expected.

Raytheon Technologies ended the quarter with $175 billion worth of backlog. Wall Street has a consensus “overweight” rating on this defence stock.

Raytheon Technologies’ guidance for the future

The stock is “iffy” also on guidance that didn’t invoke a lot of confidence. Raytheon is calling for $72 billion to $73 billion in revenue this year – roughly in line with estimates.

Its outlook for $4.90 to $5.05 of adjusted EPS was, in fact, a bit shy of $5.03 that analysts had anticipated. Still, quoting a 10% increase in defence budget for 2023, CEO Hayes said:

We’re still not producing weapons and systems fast enough to support our allies. As I’m out talking to different commands, everybody is saying we need more. It’s a very small subset of the Republicans that think we’re spending too much.

Raytheon stock is up about 20% versus late September at writing.

Raytheon Technologies’ Q4 financial highlights

• Earned $1.42 billion versus the year-ago $686 million
• Per-share earnings also shot up from 46 cents to 96 cents
• Adjusted EPS printed at $1.27 as per the press release
• Sales climbed 6.0% year-on-year to $18.09 billion
• Consensus was $1.24 a share on $18.2 billion in revenue

Also on Tuesday, Raytheon Technologies said it will realign into three business segments: Raytheon, Pratt & Whitney, and Collins Aerospace. Streamlining will complete in the back of 2023, it added.