Is Raytheon the Best Defense and Aerospace Stock to Own in 2025?

Core Insights - Defense stocks are experiencing a downturn due to President Trump's plans to de-escalate geopolitical conflicts and cut funding, raising concerns in the aerospace sector [1] - Lockheed Martin's shares fell 22% from $618.95 on October 21, 2024, to $481.82 on January 3, 2025 [1] - Northrop Grumman's stock dropped 15.8% from $555.57 to $467.82 during the same period, while Raytheon Technologies' stock fell only 10% from $128.70 to $115.83, indicating better resilience [2] Company Performance - Raytheon reported Q3 2024 EPS of $1.45, exceeding estimates by $0.11, with revenues increasing 6% YoY to $20.09 billion, surpassing the $19.84 billion consensus [3] - The company secured $25 billion in defense and $11 billion in commercial orders, raising its backlog to a record $221 billion with a book-to-bill ratio of 1.8 [3] - Raytheon's Defense Systems segment is a significant revenue generator, with 19 nations utilizing its Global Patriot missile defense system [4] Segment Analysis - Pratt & Whitney's segment saw a 14% YoY revenue growth to $7.24 billion, with military sales rising 20% and commercial sales increasing 9% [5] - Collins Aerospace reported Q3 2024 sales of $7.1 billion, up 7% YoY, driven by a 14% increase in military sales [5] - Raytheon Missiles and Defense and Raytheon Intelligence and Space segments generated $6.4 billion in sales, down 1% YoY, but operating profit increased by 16% to $647 million [5] Contracts and Future Outlook - Raytheon announced several significant military contracts, including a $946 million deal with Romania for Patriot systems and modifications to U.S. Army contracts totaling over $946 million [7] - The company’s CEO expressed confidence in robust demand across its portfolio, leading to an upward revision of the full-year outlook for adjusted sales and EPS [8] - Analyst price targets for Raytheon suggest a 54.2% upside potential, with a consensus target of $178.67, compared to lower upsides for Lockheed Martin and Northrop Grumman [8] Stock Performance and Technical Analysis - Raytheon’s stock has shown resilience compared to peers, with a head and shoulders pattern indicating potential for a reversal if it surpasses key resistance levels [9][10] - Current Fibonacci support levels for Raytheon are at $114.27, $111.37, $108.46, and $104.33, with a daily anchored VWAP at $117.02 [10] - The stock is rated as a "Moderate Buy" by analysts, with some suggesting bullish strategies for investors [11][12]