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GE Aerospace stock holds Outperform rating at Bernstein, focus on LEAP engine and OE growth

EditorAhmed Abdulazez Abdulkadir
Published 18/12/2024, 11:56
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GE
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On Wednesday, Bernstein, a research firm, maintained a positive stance on GE Aerospace (NYSE:GE), reiterating an Outperform rating with a price target of $225.00. This aligns with the broader Wall Street sentiment, as InvestingPro data shows analysts maintain a Strong Buy consensus with price targets ranging from $190 to $235.

The company, now valued at $179.44 billion, has demonstrated remarkable strength with a 69% return over the past year. The firm addressed investor inquiries regarding the comparison between GE/Safran's LEAP engine and Pratt & Whitney's GTF, following a recent report on the latter that included spare engines discussion.

The analysis highlighted the engine balance for the LEAP and touched on other recent topics that have influenced GE's stock performance. Observations were made on the shift in market sentiment within the commercial aerospace sector, transitioning from a focus on aftermarket growth to original equipment (OE) growth.

According to InvestingPro, GE maintains a solid financial health score of "GOOD," with particularly strong marks in profitability metrics. Get access to 10+ additional exclusive ProTips and comprehensive analysis through InvestingPro's detailed research reports.

In the past month, aftermarket-oriented stocks, including GE, have seen underperformance against the S&P 500 index. This group also includes FTAI, Standard Aero, Transdigm, HEICO (NYSE:HEI), and RTX, which have not performed as well as companies more heavily involved in OE, such as Boeing (NYSE:BA), Airbus, and Hexcel (NYSE:HXL).

Despite the noticeable trend, Bernstein expressed the view that the aftermarket is far from diminishing. The recent underperformance is seen as part of a narrative that has been present for some time, rather than an indication of the aftermarket's end.

The firm's analysis suggests that while there has been a shift in investor sentiment, the aftermarket segment continues to hold significant value. InvestingPro's Fair Value analysis indicates the stock is currently trading near its intrinsic value, with robust fundamentals supporting its market position as a prominent player in the Aerospace & Defense industry.

In other recent news, GE Aerospace has been the focus of several analyst adjustments. Bernstein SocGen Group maintained a positive outlook on the company, reiterating an Outperform rating with a price target of $225.00. This was in line with the broader analyst consensus, indicating a highly bullish rating.

RBC Capital, Wells Fargo (NYSE:WFC), and UBS also adjusted their price targets for GE Aerospace, with RBC Capital lowering its target but maintaining an Outperform rating, while Wells Fargo and UBS increased their targets.

GE Aerospace reported significant financial growth with a 28% increase in orders, a 6% rise in revenue, and a 14% surge in operating profit. The company's adjusted earnings per share soared by 25%, and it generated a substantial $1.8 billion in free cash flow. As a result, GE Aerospace increased its full-year operating profit guidance to between $6.7 billion and $6.9 billion.

In terms of partnerships, GE Aerospace and Lilium are collaborating to establish robust safety protocols for the emerging electric Vertical Take-Off and Landing (eVTOL) aircraft industry. The partnership aims to integrate GE's Event Measurement System (EMS) with Lilium's flight data analytics.

Lastly, GE Aerospace is investing $1 billion in Maintenance, Repair, and Overhaul (MRO) to enhance aftermarket capacity and is opening a new LEAP MRO shop in Poland.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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