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UBS raises GE Aerospace stock target by $10, keeps Buy rating

EditorAhmed Abdulazez Abdulkadir
Published 23/05/2024, 13:04
© Reuters.

On Thursday, UBS has updated its assessment of GE Aerospace (NYSE: GE), increasing the price target to $201 from the previous $191 while reiterating a Buy rating on the stock. The firm highlights GE Aerospace's strong position in the industry, noting that the company's earnings and valuation are expected to benefit from its 100% EBIT exposure to the recurring aerospace aftermarket and its leading role in the narrowbody engine market.

The analysis by UBS forecasts that GE Aerospace's equipment revenue will double in the next four years, contributing to a 4% compound annual growth rate (CAGR) in the installed base. This growth is anticipated to be bolstered by mid-high single-digit pricing, robust flight activity, and an increase in engine shop visits. Consequently, UBS projects a five-year 13% CAGR in the aftermarket, which is seen as margin-accretive.

UBS's positive outlook for GE Aerospace is further justified by the expectation of a 60% premium over the S&P 500 index. This valuation is supported by historical comparisons in the aerospace aftermarket sector. Moreover, UBS's estimated $12 billion EBIT for the year 2028 surpasses GE's own guidance of $10 billion, indicating a more optimistic view of the company's financial prospects.

InvestingPro Insights

As UBS updates its assessment of GE Aerospace (NYSE: GE), a quick glance at real-time data and InvestingPro Tips can provide additional context for investors. With a Market Cap of $175.8 billion and a P/E Ratio that stands at 19.02, GE's financial health appears robust. Notably, the company has experienced a Revenue Growth of 16.96% over the last twelve months as of Q1 2023, underlining the firm's solid performance in the market.

InvestingPro Tips reveal that 8 analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's future financial performance. Moreover, GE's prominence as a key player in the Aerospace & Defense industry is bolstered by its track record of maintaining dividend payments for 54 consecutive years. This consistency is a testament to the company's financial stability and commitment to shareholder returns.

For those looking to delve deeper into GE's prospects, InvestingPro offers additional insights, including a total of 12 tips related to the company's financial metrics and market performance. Investors can unlock these valuable tips and more by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With the next earnings date set for April 23, 2024, and an analyst-targeted Fair Value of $180.02, GE Aerospace's stock may present an intriguing opportunity for those who recognize its growth trajectory and industry leadership.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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