Wells Fargo initiates GE Aerospace stock coverage citing LEAP SV ramp

Investing.com - Wells Fargo initiated coverage on GE Aerospace (NYSE:GE) with an Overweight rating and set a price target of $325.00, according to a report released Tuesday. The target represents about 15% upside from the current price of $283.77, though the stock trades above InvestingPro’s Fair Value estimate, placing it on the Most Overvalued list.

The firm bases its price target on a 28x free cash flow multiple applied to its 2028 forecast. Wells Fargo expects the LEAP SV ramp to trigger higher-than-anticipated revisions to market expectations. The aerospace giant, with a market cap of $296.5 billion, currently trades at a P/E ratio of 35.25, though its PEG ratio of 0.96 suggests reasonable valuation relative to growth.

The firm’s 2028 EBIT and free cash flow forecasts exceed consensus estimates. Wells Fargo sees potential for further positive revisions despite expectations already moving ahead of 2028 guidance.

The upside case centers on a faster-than-expected LEAP SV ramp combined with a higher LEAP SV price than currently modeled by the market. The firm also expects the 9X loss to represent a smaller drag than GE Aerospace has indicated.

"We initiate coverage of GE at Overweight, as we see the LEAP SV ramp triggering higher than anticipated revisions to expectations," Wells Fargo stated in its report. For deeper analysis, InvestingPro offers a comprehensive Pro Research Report on GE Aerospace, one of 1,400+ US equities covered with expert insights and actionable intelligence.

In other recent news, GE Aerospace announced a joint contract with Kratos Defense & Security Solutions valued at $12.4 million to design an engine for the U.S. Air Force. The project involves creating the GEK1500 engine, which is intended for small Collaborative Combat Aircraft and unmanned systems. Additionally, GE Aerospace has expanded its partnership with Palantir Technologies to enhance military aviation readiness, deploying AI-powered solutions to improve production and mission readiness for the U.S. Air Force.

In analyst updates, Bernstein SocGen Group raised its price target for GE Aerospace to $405, citing growth in services and increased estimates for widebody services. The firm highlighted higher content and pricing on GEnx and GE90 engines and expects CFM56 shop visits to remain high due to capacity constraints and demand. Meanwhile, Daiwa Securities initiated coverage on GE Aerospace with a Neutral rating, expressing concerns over elevated jet fuel prices and their potential impact on airline operations. These developments reflect the ongoing strategic moves and market analyses surrounding GE Aerospace.

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