The case for buying stock in defense and aerospace giant Raytheon Technologies (RTX -0.35%) just got a little stronger.

While the company is facing ongoing headwinds in 2022, and its full-year outlook has some uncertainty attached to it, CEO Greg Hayes' latest presentation at the Morgan Stanley Laguna Conference indicated the business is ideally placed to benefit from solid end demand in its markets. Here's the lowdown. 

First, the bad news

As usual, it's a good idea to start with what Hayes said about the headline guidance, which was slightly disappointing. He reiterated the full-year guidance for sales of $67.75 billion to $68.75 billion and adjusted earnings per share (EPS) of $4.60-$4.80, but said Raytheon would "probably" be at the low end of the revenue range.

The news on free cash flow (FCF) is mixed. On the one hand, Hayes reaffirmed what the company had told investors earlier in the week: Full-year FCF will now be $4 billion instead of the previously forecast $6 billion. On the other hand, he explicitly said the $2 billion shortfall was due to a change in the law on research and development tax credits. As such, investors can assume Raytheon was on track to hit $6 billion in FCF before the law was changed. 

In a nutshell, Raytheon continues to suffer from the same supply chain issues that have bedeviled much of the industrial sector -- and aviation in particular -- in 2022. Rival Boeing is struggling to deliver aircraft, let alone ramp up production, due to a lack of engines. In addition, Raytheon's Pratt & Whitney segment and General Electric are behind schedule on engine deliveries. 

On that note, Hayes said that Pratt would catch up on deliveries of structural castings (needed to manufacture engines) "mostly" by the end of the year, "but some of them may drag into the first quarter." The semiconductor shortage is expected to extend into the middle of next year.

Why Raytheon stock is a buy

Having addressed the negative news, it's time to take a half-glass-full approach. I have a few key points.

First, the supply chain issues are not new news. In fact, they've transpired throughout the year. However, the fact that Hayes reaffirmed that the delivery of structural castings would mostly catch up by the end of the year is good news. It suggests the company is slowly overcoming supply chain issues. That means aircraft manufacturers could start to ramp up production on their aircraft. Raytheon's Pratt offers an engine for the Airbus 320 neo family of aircraft.

Second, Hayes outlined the considerable potential for growth in original equipment sales at Raytheon's Collins Aerospace (aircraft structures, cabins, avionics, etc.) and Pratt. According to Hayes, if the Boeing 737 MAX production ramps from 31 a month in 2022 to 42-48 a month in 2025, and the Airbus A320 neo ramps from 48 a month in 2022 to 65 a month in 2025, then "you would see over a 50% increase in OE revenue between Pratt and Collins between now and 2025."

Third, the defense side of the business (primarily Raytheon Missiles & Defense and Raytheon Intelligence & Space) is "seeing an incredible amount of demand" for some of the products (including Stingers and Javelins) used in the conflict in Ukraine. CFO Neil Mitchill is confident enough to give a figure of mid- to high-single-digit long-term growth in the defense businesses to 2025. The problem is getting the supply chain in shape to meet demand rather than any issue with underlying demand -- a good "problem" to have.

A stock to buy

All told, Raytheon's commercial aerospace businesses are in robust recovery mode, and its defense business outlook also looks very strong. Everything points to a company set for rapid growth through 2025, and Raytheon remains one of the best investing options in the defense and aerospace sector.