Al Root

GE Aerospace rose on Tuesday after the jet engine maker picked up another bullish rating on Wall Street.

Olivier Brochet, an analyst with Redburn Atlantic, launched coverage of the stock with a Buy rating and a $250 price target.

In midmorning trading, shares were up 1.4% in early trading at $211.24. The S&P 500 and Dow Jones Industrial Average were both off about 0.1%.

"GE Aerospace stands out as the engine maker with the largest and most profitable installed base, offering investors sustained earnings growth and good cash conversion well into the 2030s, with limited volatility and downside risks," wrote Brochet.

In short, the "winner takes all" in this case.

Roughly three-quarters of all commercial flights take off with GE Aerospace engines. That position translates into strong margins, earnings, and reinvestment in new technology.

"It justifies a material valuation premium to other engine and best-in-class capital good stocks," added Brochet.

Shares trade for about 32 times estimated 2026 earnings, according to FactSet. The S&P 500 trades for closer to 20 times. It's a big valuation multiple, but S&P 500 earnings are expected to grow 8% to 10% a year for the coming few years. GE Aerospace earnings are expected to grow twice that fast.

Underpinning that earnings growth is more planes flying. Boeing and Airbus delivered roughly 1,000 commercial jets in 2024. That number is expected to grow to about 1,750 by the end of the decade.

Brochet's view is in line with the consensus. Overall, about 86% of analysts covering the company rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for GE Aerospace shares is about $229 apiece.

Investors agree, too. The stock, adjusted for the April 2, 2024, spinoff of GE Vernova, was up about 78% over the past 12 months.

Write to Al Root at allen.root@dowjones.com

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February 18, 2025 11:00 ET (16:00 GMT)

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