GE Aerospace Receives Positive Analyst Ratings and Strong Price Targets

GE Aerospace earns a Buy rating with a $160 target, signaling strong aftermarket dominance and a potential 13% stock increase.

By Alex P. Chase

4/4, 08:33 EDT

Key Takeaway

  • Vertical Research Partners initiates GE Aerospace with a Buy rating and $160 price target, highlighting its dominant aerospace aftermarket position.
  • Analyst consensus sets an average price target of $165, with Barclays and Deutsche Bank projecting up to $190, reflecting strong Wall Street optimism.
  • GE Aerospace aims for a $10 billion operating profit by 2028, underpinned by robust sales growth and the global aerospace industry's recovery.

GE Aerospace's Market Position

GE Aerospace, recently separated from Vernova, has been highlighted by Vertical Research Partners analyst Rob Stallard as a standout in the aerospace sector. Stallard initiated coverage with a Buy rating and a $160 price target, emphasizing the company's dominant position in the aerospace aftermarket. This segment is estimated to generate about 80% of GE Aerospace's operating profit. Despite some non-core elements and a high valuation, Stallard believes the stock has further potential. GE Aerospace's engines are a critical component in the aviation industry, powering three out of four commercial flights worldwide. This capability, combined with a strong aftermarket presence, has contributed to a significant 90% stock price increase over the past year.

Wall Street's Optimism

Following the separation from Vernova, analysts have been updating their assessments and price targets for GE Aerospace. Notably, Barclays and Deutsche Bank have set their targets at $175 and $190, respectively. An average target of approximately $165, representing a 13% increase from recent levels, has been identified based on early updates. This positive outlook is supported by a majority of analysts maintaining Buy ratings on the stock. Before the spin-off, 68% of analysts rated GE as a Buy, compared to the S&P 500's average Buy-rating ratio of about 55%. This bullish sentiment underscores Wall Street's confidence in GE Aerospace's prospects.

Financial Projections and Growth

GE Aerospace has outlined ambitious financial goals for the future, aiming for $10 billion in operating profit by 2028, up from an expected $6.3 billion in 2024. This target reflects an average annual growth rate of approximately 12%. The company's 2023 performance, with $31.8 billion in sales and a $6.1 billion operating profit, sets a strong foundation for this growth trajectory. GE Aerospace anticipates continued double-digit sales growth and operating profits of $7.1 billion to $7.5 billion in 2025. The global aerospace industry's recovery and expected growth in airline passenger traffic by about 7% annually from 2023 to 2028 further bolster these projections.

Street Views

  • Rob Stallard, Vertical Research Partners (Bullish on GE Aerospace):

    "While the stock has been on a tear over the last year…we think it is still the most appealing of the three mega-cap U.S. aerospace names... It has the largest and highest-quality exposure to the aerospace aftermarket, which we estimate generates about 80% of operating profit."