Investing.com -- Melius Research has upgraded RTX Corp. to buy from hold, raising its defense estimates and price target to $242 a share as the firm expects Operation Epic Fury to generate a sustained wave of military procurement that disproportionately benefits the aerospace and defense giant.

Analyst Scott Mikus forecast high-single-digit core sales growth for the defense end market through 2028, well above consensus projections for mid-single-digit growth, underpinned by multi-year production frameworks for missiles, munitions and shipbuilding programs.

Mikus added that "absent supply chain constraints, annual sales growth in the defense end market would likely exceed 10% over the next several years."

RTX's role as prime contractor for the Patriot, NASAMS, AMRAAM, Standard Missile and Tomahawk programs puts it at the center of surging demand.

Melius estimated that replacing RTX-produced munitions expended in the first 16 days of Operation Epic Fury alone would cost roughly $6 billion, with further upside as inventories are replenished above pre-conflict levels.

The firm calculates that roughly 18% of RTX's total sales are tied to missiles and missile defense, with production volumes for some programs expected to double or quadruple as multi-year agreements are finalized.

Mikus highlighted RTX's balanced revenue mix, with 52% defense and 48% commercial aerospace, as a key attraction, offering exposure to the defense upcycle while retaining a foothold in commercial aero.

He noted that heavy F-35 utilization in the conflict would also drive incremental maintenance and spare parts demand at Collins Aerospace and Pratt & Whitney.