Deutsche Bank (ETR:DBKGn) increased its price target for GE Aerospace (NYSE:GE) shares from $212 to $235, while keeping a Buy rating on the stock. The firm anticipates that GE Aerospace could surpass earnings per share (EPS) expectations by 9% in their base case scenario. Additionally, there is a possibility of a 15% EPS beat if certain favorable conditions are met, such as Commercial Engine Services (CES) margins reaching approximately 26%.
The analyst highlighted the potential for GE Aerospace's financial performance to improve further, citing several factors that could contribute to this outcome. These include improved pricing, a better mix of scope and widebody products, and increased demand for spare parts. However, the analyst also noted the volatility in the original equipment (OE) mix and internal shop visit growth, which could present challenges in cost absorption.
Despite these potential headwinds, the analyst remains optimistic about the company's ability to significantly outperform expectations, describing a 15% EPS beat as "big." The firm also expects GE Aerospace to achieve better-than-expected free cash flow (FCF), bolstered by robust collections from Commercial Service Agreements (CSA) during the summer flying season and improved inventory trends. This optimism is further supported by anticipated increases in LEAP engine deliveries and spare part shipments.
Deutsche Bank predicts that GE Aerospace may see upward revisions in both earnings before interest and taxes (EBIT) and FCF in the future, indicating confidence in the company's financial trajectory.
Siemens Energy has agreed to a settlement of $104 million with U.S. authorities over allegations of stolen trade secrets used in gas turbine contract bids. In Texas, the Public Utility Commission has shortlisted 17 gas-fired power plant projects for potential funding from a $5.38 billion government pool. BofA Securities has maintained its Buy rating on GE Aerospace, reiterating a price target of $180, following a conference call discussing the company's recent financial results.
Poland has finalized a $12 billion agreement with the United States to purchase 96 AH-64E Apache (NASDAQ:APA) attack helicopters, signing offset agreements with Boeing (NYSE:BA) and General Electric (NYSE:GE) to balance the economic impact of this large-scale military purchase.
As part of these recent developments, GE Aerospace reported strong second-quarter results for 2024, surpassing consensus estimates with revenue reaching $8.2 billion.
InvestingPro Insights
GE Aerospace's strong market position and financial performance, as highlighted by Deutsche Bank's analysis, are further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $204.03 billion, reflecting investor confidence in its growth potential. GE's revenue growth of 16.96% over the last twelve months and 15.43% in Q4 2023 aligns with the analyst's positive outlook on the company's financial trajectory.
InvestingPro Tips reinforce the bullish sentiment. GE is noted as a "Prominent player in the Aerospace & Defense industry," which corroborates Deutsche Bank's optimistic stance. The company's profitability over the last twelve months and its strong return over the last year (with a remarkable 118.15% price total return) underscore its solid financial performance.
Additionally, GE has maintained dividend payments for 54 consecutive years, demonstrating long-term stability that may appeal to income-focused investors. The company's current dividend yield is 0.6%, with the last ex-dividend date on September 26, 2024.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for GE, providing a deeper understanding of the company's financial health and market position.
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