Morgan Stanley, JPMorgan Cut GE Aerospace Price Target to $375
Key Facts
Morgan Stanley and JPMorgan cut their price targets for GE Aerospace to $375 from $400, according to Investing.com, as the company raised its financial forecasts for 2026 in results released on October 20. Morgan Stanley maintained its Overweight rating on the stock, attributing the target adjustment to "oil price pressures and potential valuation multiple compression." JPMorgan also retained its Overweight rating despite lowering its price target. JPMorgan's adjustment came alongside a slight increase in its analyst's earnings estimates, according to the website. The company raised its full-year adjusted earnings per share range to $8.00–8.10 from its previous forecast of $7.65–7.85.
GE Aerospace said in its earnings release that orders totaled $19.0 billion in the third quarter of 2026, up 49% year on year. Adjusted revenue reached $13.3 billion, up 18% from the same period a year earlier. Adjusted earnings per share were $2.25, representing year-on-year growth of 36% during the quarter. Adjusted operating profit rose to $3.0 billion, up 30% from the corresponding period. Quarterly free cash flow, however, fell 14% to about $2.0 billion, according to figures in the company's release.
In its services business, the company said internal shop visit revenue grew 12% during the third quarter. Spare parts revenue rose more than 20% over the same period, according to an update published by its investor relations department. The company attributed improved commercial business profit to "higher services volume and pricing, offset by mix and inflation pressures." Reuters reported that most engine shop visit work for the current year was already under contract. The agency added that demand for spare parts continued to exceed supply, as the company recorded revenue growth in both maintenance and spare parts.
In equipment, GE Aerospace reported a 38% increase in revenue during the third quarter, according to the investor relations update. Commercial engine deliveries also rose 8% over the same period, the company said. In the stock market, GE shares closed at $299.87 on October 20, according to EL7 data. The stock had ended the October 19 session at $311.28, marking a decline between the two closes. The shares fell on the day the company released quarterly results that included higher annual forecasts for earnings and adjusted revenue.
For full-year adjusted revenue, the company now targets growth of about 19–20%, according to updated guidance accompanying its third-quarter results. Its previous forecast called for growth in the high teens, according to the comparison in the official presentation. The company also raised its annual free cash flow forecast to a range of $9.1 billion to $9.4 billion. The previous range was $8.9 billion to $9.2 billion, according to the earnings release. The increase in annual free cash flow guidance came despite the year-on-year decline in the measure during the third quarter.
In its outlook for next year, management discussed losses associated with the GE9X engine during the earnings call. It said those losses would put additional pressure on earnings in 2027 compared with 2026. Management estimated the additional pressure at about $300 million year on year, according to the call transcript published by the company. That forms part of its expectations for the impact of engine losses on earnings heading into next year. GE Aerospace listed January 21, 2027, in its official presentation as the date for releasing its fourth-quarter 2026 results.