Morgan Stanley Initiates GE Aerospace Coverage With Top Price Target

GE Aerospace (GE) follows up Thursday’s breakout with a major vote of confidence from Wall Street giant Morgan Stanley. The brokerage initiated coverage of the stock with a $425 price target — one of the highest among analysts following the company.

Morgan Stanley analyst Kristine Liwag lauded GE Aerospace’s ability to fend off possible competitors in an industry that already struggles to attract new entrants.

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Morgan Stanley Initiates Coverage

GE Aerospace stock is up about 20% so far this year. Morgan Stanley’s $425 price target implies 26% gains from Thursday’s closing price.

The upside hinged on the likelihood that the company would revise its earnings and free cash outlook higher, according to Liwag. During its latest earnings report in January, GE Aerospace trounced expectations for both. Last quarter, free cash flow of $1.76 billion was 26% higher than the Wall Street consensus. Meanwhile, quarterly EPS of $1.54 was nearly 10% above expectations, according to FactSet.

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Demand should continue to hold steady for GE aircraft engines, which are “mission-critical” to the industry, Liwag wrote. That would allow GE Aerospace to raise prices over the long term. GE Aerospace’s backlog is currently around $190 billion.

Liwag also expects marked growth in the GE Aerospace maintenance and repair business. That’s in addition to its sales of engines and other critical aerospace parts. She says current estimates undervalue the free cash flow potential of the company. That cash flow is a critical measure for firms with high capex spending like GE Aerospace.

Morgan Stanley reached its $425 price target based on a forecast of $10.85 free cash flow per share by 2028. That number is well ahead of the Wall Street consensus of $9.85 free cash flow per share for 2028, according to FactSet.

GE Aerospace Breaks Out

The stock on Friday was in a buy zone after a Thursday breakout above a second-stage flat base buy point of 332.79. The buy zone runs to 349.43.

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Shares of GE Aerospace traded 2% higher on Friday, reaching a record high. Since becoming an aviation pure-play in April 2024, after spinning off its health care and energy divisions, GE Aerospace is up about 150%.

In conjunction with its promising stock performance, GE Aerospace announced that United Airlines (UAL) will used 300 of its GEnx engines to power its new Boeing 787 Dreamliners. The stock rose close to 4% on the news.

GE Aerospace’s relative strength line is currently at a new high, and its Relative Strength Rating is a strong 86, according to MarketSurge. The stock has a 97 Composite Rating, according to IBD analysis. Shares are currently above both the 21-day exponential moving average and the 50-day line, per MarketSurge data.

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