RTX (RTX) and Boeing (BA) are poised to benefit as supply chain constraints ease, aircraft production ramps up and defense spending climbs, Morgan Stanley said Thursday in a report.

The aerospace sector remains relatively insulated from economic and geopolitical uncertainty with favorable supply-demand dynamics, the report said.

RTX is well-positioned for near-term growth in missiles and missile defense, supported by rising US and international budgets, Morgan Stanley said. Boeing's recent F-47 program win boosts its defense outlook, though the Air India crash investigation may weigh on sentiment in the short term, the report said.

RTX continues to see steady air traffic growth, which supports its commercial aftermarket business, Morgan Stanley said. Boeing's ramp-up in aircraft production may benefit RTX's Collins unit through 2025 as global defense spending and backlog remain strong, the report said.

Morgan Stanley boosted its price target on RTX stock to $165 from $135 and maintained its overweight rating. The price target on Boeing was increased to $235 from $200 with an equalweight rating.

RTX is scheduled to announce Q2 earnings on Tuesday with Boeing results expected July 29.

RTX shares rose 0.8% in recent Thursday trading, and Boeing gained 0.1%.

Price: 151.33, Change: +1.16, Percent Change: +0.77