Corporate bond research firm Gimme Credit reiterated an Underperform rating on RTX's (RTX) 2034 notes at T+02 in a note this week following the company's latest quarterly earnings report.
Analysts at Gimme Credit acknowledged that RTX reported mostly good fourth-quarter and full-year earnings this week, with the stock market seemingly "relieved that management essentially reaffirmed its latest estimates for the negative financial impact of its recall for contaminated powdered metal used in Pratt & Whitney geared turbofan (GTF) engines."
"The stock rose as much as 8% but remains well below where it was before the GTF issue was disclosed last fall," the analysts said. "Frankly, the stock has not improved much since management announced the shocking decision to borrow $10 billion to buy back stock in an accelerated share repurchase (ASR), which it executed in the fourth quarter."
The analysts added that the fact that a company "can squander this amount of borrowed money" on a share buyback but scarcely lift the stock price makes them wonder whether more aggressive financial tactics may yet be employed.
Overall, Gimme Credit believes that the "event risk remains high as long as the stock remains low."