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Why Shares in GE Aerospace Surged Higher Today

Motley Fool - Wed Apr 3, 11:30AM CDT

GE Aerospace's (NYSE: GE) shares were up by 6% at 11:30 a.m. ET today. The company, formerly General Electric, rose after a few updates from heavyweight financial firms.

GE Aerospace analyst updates

Wall Street analysts will likely be busy with GE Aerospace, as it's no longer part of a multi-industry industrial company but now a stand-alone aerospace and defense company. That often means aerospace analysts will cover the stock rather than industrial experts.

As such, a Barclays analyst assumed coverage of the company with a $185 price target and an overweight rating.

In addition, Deutsche Bank adjusted for the spinoff of GE Vernova (NYSE: GEV) and lowered the price target for GE Aerospace from $210 to $190. However, to put that new target into context, GE Vernova trades at $140, and General Electric shareholders received one share in GE Vernova for every four they held in General Electric, so the GE Vernova is equivalent to around $35 in "old GE" stock.

Moreover, the $190 price target implies a 31% premium to the current price. Whichever way you look at it, Wall Street analysts are bullish on GE Aerospace's prospects.

A passenger at an airport.

Image source: Getty Images.

A bright outlook

They have good reason to do so because the commercial aerospace recovery continues to build, and GE's joint venture with Safran, CFM International, continues to ramp up production of its LEAP engines aggressively. The LEAP engine is used on the narrow-body workhorses of the skies: the Airbus A320 neo family, the Boeing 737 MAX, and the Comac C919. As such, investors can expect decades of lucrative aftermarket revenue ahead.

Moreover, given the need to inspect RTX's (Pratt & Whitney) geared turbofan engines (an option on the Airbus A320 neo family) for potential contamination, GE Aerospace can grab market share from RTX. It speaks to a bright future for the best-run company in the large-cap aerospace sector.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends RTX. The Motley Fool has a disclosure policy.

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