RTX (RTX -0.08%) beat on both the top and bottom lines in its earnings report last week. But it also released guidance for the rest of 2024 which revealed less than many analysts hoped.

That news led Wells Fargo analyst Matthew Akers to trim his RTX price target by $1 (to $119 per share). The new target implies 16% upside over the next 12 months. On balance, the analyst remains optimistic about this defense contractor's chances and maintains his "overweight" rating on the stock.

Why?

Up 50% from October 2023 lows, is RTX stock still a buy?

RTX reported falling profit margins in two of its three main businesses, with Pratt & Whitney declining to an anemic 6.4%. But after earning just $2.23 per share last year, RTX predicted profits will bounce back to at least $5.25 per share this year -- more than double last year's performance.

How will RTX do that? Akers says RTX's forecast implies a "substantial ... margin ramp up at both Collins and Pratt" (RTX's airplane parts and airplane engines businesses, respectively). Importantly, the analyst says the number of airplanes grounded by airlines for inspection of suspect Pratt & Whitney engines has peaked, and this division's numbers should improve throughout this year -- and beyond.

He's probably right.

When RTX first admitted its problems with manufacturing defects in its engines in July 2023, management forecast anywhere from nine to 12 months of accelerated inspections, and removals of engines, that would ground planes in which the engines were installed. Nine months later, this problem should be largely behind RTX -- and both sales and profit margins should begin bouncing back.

Granted, there's still the question of whether RTX stock is too expensive to buy. The timeline for inspecting and replacing engines wasn't exactly a secret, and RTX's stock price has risen roughly 50% from its October 2023 lows in anticipation of this very event that's got Wells Fargo feeling optimistic. At 40 times trailing earnings and 2x annual sales, RTX is no longer a cheap stock.

Just because Akers says it's a buy ... doesn't mean he's right.