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GE Aerospace(GE-N)

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GE Aerospace Stock Has 22% Upside, According to 1 Wall Street Analyst

Motley Fool - Mon Apr 8, 1:26PM CDT

GE Aerospace(NYSE: GE) is the legacy business of the former General Electric, which recently completed its separation into three distinct businesses. In adjusting his take on the company now that it has "Aerospace," attached to its name, one pundit following the stock reduced his price target. He still feels the shares have plenty of room to move higher, though.

General Electric slims down into GE Aerospace

The analyst behind the adjustment is Deutsche Bank's Scott Deuschle, who lopped off $20 from his previous price target (back when the stock was just plain old General Electric) for a new level of $190 per share. That implies a nearly 22% upside from the current price. He also ported over his buy recommendation to GE Aerospace.

The company, which is now more focused than the former General Electric, is deserving of a premium over its peers. Deuschle wrote that this is due to GE Aerospace's "wide moat, dominant share position, strong long-term growth outlook, pricing power, high [return on total capital], high balance sheet optionality, and track record for beating and raising."

Deuschle is convinced GE Aerospace can soar. He pegged it as being one of Deutsche Bank's top stock picks in the aerospace and defense field.

Good timing

I feel this assessment is realistic, as GE Aerospace is coming into existence at a busy time for the commercial aviation industry, an important customer base for the company. With tourism demand strong and sustainable, those customers will need turbofan engines like the LEAPs GE Aerospace and European peer Safran Aircraft Engines produce in their joint-venture CFM International. The former's stock feels like it can gain more altitude.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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