On Wednesday, BofA Securities maintained its Buy rating on shares of GE Aerospace (NYSE: GE) with a steady price target of $180.00. The company has uplifted its full-year earnings per share (EPS) projection, now expecting an EPS between $3.95 and $4.20, an increase from the previously estimated range of $3.80 to $4.05. This revision is largely attributed to higher-than-anticipated service volumes at GE's Commercial Engines & Services (CES).
GE Aerospace is experiencing ongoing challenges on the equipment side of the business, yet the company is actively enhancing its supply chain capabilities. A significant commitment of resources involves deploying over 550 engineers to optimize operations across 15 critical supplier sites.
Moreover, GE is set to invest $1 billion in its FLIGHT DECK initiative over the forthcoming five years, aiming to expand its maintenance, repair, and overhaul (MRO) capacity.
Despite the positive adjustments in EPS and free cash flow (FCF) forecasts, GE Aerospace has moderated its revenue growth expectations to high single digits, a revision from the previously anticipated low double-digit growth. The outlook for Defense & Power Turbines (DPT) segment remains steady, with no changes reported.
The company's FCF outlook has also been adjusted upward, now anticipated to be between $5.3 billion and $5.6 billion, compared to the earlier forecast of greater than $5 billion. The updated financial guidance is expected to be well received by the market, as it reflects GE Aerospace's strategic approach to overcoming the current turbulence in the original equipment (OE) aircraft market through an improved revenue mix and pricing strategies.
In other recent news, GE Aerospace reported significant growth in its second-quarter results for 2024, with adjusted earnings per share (EPS) of $1.20, surpassing the consensus estimate of $0.99. Revenue for the quarter reached $8.2 billion, a 4% increase. RBC Capital Markets adjusted its outlook on GE Aerospace, increasing the price target to $190 from the previous $175, while reaffirming an Outperform rating on the stock.
The company also raised its full-year operating profit expectations to between $6.5 billion and $6.8 billion, and adjusted EPS of $3.95 to $4.20. Free cash flow is forecasted to be in the range of $5.3 billion to $5.6 billion. Despite supply chain issues, GE Aerospace secured new engine orders from Turkish Airlines, National Airlines, and Japan Airlines, and advanced its CFM RISE program aimed at reducing emissions.
GE Aerospace has also invested $1 billion in MRO facilities to boost capacity and reduce turnaround time. The Customer Engine Services (CES) segment reported a 27% margin in Q2, with growth in service revenue.
The company aims for approximately $10 million in operating profit by 2028 and expects free cash flow to exceed net income. These are recent developments that signal the company's ability to meet customer demand and its commitment to safety, quality, and sustainable solutions.
InvestingPro Insights
As GE Aerospace (NYSE: GE) forges ahead with strategic investments and upward revisions in its earnings outlook, real-time data from InvestingPro highlights several key metrics that investors should consider. With a robust market capitalization of $188.01 billion and a P/E ratio standing at 20.54, GE's financial health appears resilient.
The company's revenue for the last twelve months as of Q4 2023 reached $67.95 billion, showcasing a significant year-over-year growth of 16.96%. This revenue uptick is complemented by a gross profit margin of 21.83%, reflecting efficient cost management amid challenging market conditions.
InvestingPro Tips further reveal that analysts are optimistic about GE's performance, with 8 analysts revising their earnings upwards for the upcoming period. Additionally, GE's strong foothold in the Aerospace & Defense industry, coupled with a significant return over the last week, underscores its competitive position.
For investors seeking deeper insights and additional tips, there are more InvestingPro Tips available, including details on GE's dividend consistency and debt levels. To access these valuable insights, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at Investing.com.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.