GE Aerospace (GE) Stock: Why Analysts See 26% Upside After Stellar Earnings

TLDR:

GE Aerospace reported Q1 EPS of $1.49, beating analyst expectations of $1.26-$1.27 Company maintaining full-year guidance despite tariff impacts Commercial services backlog exceeds $140 billion Stock rose in premarket trading following results announcement Company plans to invest nearly $1 billion in U.S. factories and supply chain in 2025

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GE Aerospace posted impressive first-quarter earnings on Tuesday, beating Wall Street expectations and maintaining its full-year outlook despite potential challenges from new tariffs. The aircraft engine manufacturer demonstrated resilience in a challenging economic environment.

The company reported $1.49 earnings per share on revenue of $9 billion to $9.94 billion. This handily exceeded analyst expectations of $1.26 to $1.27 per share. Operating profit reached $2.1 billion, outperforming Wall Street’s projection of $1.9 billion.

GE Aerospace (GE)

This performance marks substantial growth from a year earlier. In Q1 2024, GE’s aerospace segment reported an operating profit of $1.5 billion from sales of $8.1 billion.

Investors responded positively to the news. GE shares rose 1.4% in premarket trading to $180.84, while broader market indices also showed gains.

Tariff Challenges and Mitigation

The earnings report comes amid concerns about the impact of tariffs on the aerospace industry. GE Aerospace addressed these worries head-on in its guidance.

CEO Larry Culp outlined the company’s strategy. “The macroeconomic dynamics we are operating in today require us to take a number of strategic actions, such as controlling costs, and leveraging available trade programs,” he stated.

The company plans to counter tariff impacts through several measures. These include optimizing operations, leveraging existing programs, controlling costs, and implementing pricing actions.

Unlike some competitors, GE Aerospace maintained its full-year guidance despite tariff concerns. For comparison, 3M kept its EPS guidance range unchanged but warned that tariffs could reduce it by 20 to 40 cents.

One specific concern involves Chinese tariffs of 125% on U.S. imports. These have reportedly led some Chinese airlines to refuse delivery of Boeing 737 MAX jets, which are powered by GE engines.

Growth Outlook and Investment

Despite these challenges, GE Aerospace has raised its sales guidance. The company now expects to grow sales by a low double-digit percentage, up from the 10% projected in January.

Profit guidance remained steady. The midpoint of its range of operating profit forecasts stays at $8 billion, with EPS around $5.30. Wall Street is currently projecting $5.42.

The company points to its substantial backlog as a reason for confidence. GE Aerospace has a commercial services backlog exceeding $140 billion, providing stability amid economic uncertainties.

In a sign of long-term confidence, the company announced plans to invest nearly $1 billion in its U.S. factories and supply chain this year. This represents roughly double what it spent on these areas in 2024.

Market Position and Analyst Views

Tuesday’s report comes just after GE Aerospace marked one year as a standalone company. The separation from GE Vernova was completed on April 2, 2024.

The stock has shown resilience compared to the broader market. Since the November 5 presidential election, GE Aerospace stock has risen 2%, while the S&P 500 and Dow Jones Industrial Average have declined 11% and 10%, respectively.

Analysts remain optimistic about the company’s prospects. All 10 brokers tracked by Visible Alpha rate the stock a “buy,” with an average price target of $224.90. This represents a potential upside of about 26% from Tuesday’s opening price.

The current valuation leaves GE Aerospace shares trading at about 34 times estimated 2025 earnings. This is slightly lower than the approximately 36 times earnings multiple from a year ago.

Options markets suggest the stock may move about 5% following the earnings announcement. In the prior four earnings reports, shares moved about 7%, rising three times and falling once.

GE Aerospace’s ability to maintain guidance while acknowledging tariff impacts shows management’s confidence in their mitigation strategies. The company appears well-positioned to navigate current trade tensions while continuing its growth trajectory.

The robust backlog and planned U.S. investment demonstrates the company’s commitment to long-term growth despite short-term economic headwinds. For investors, this presents a compelling case for the aerospace manufacturer’s resilience in challenging market conditions.

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