GE Aerospace Stock Has 19% Upside, According to 1 Wall Street Analyst

GE Aerospace (NYSE: GE) stock has performed exceptionally well since becoming a separate company. A analyst recently set a $175 price target and an "overweight" rating on the stock, indicating a nearly 19% upside over the next 12 months.

The analyst is optimistic about GE Aerospace's long-term profit growth and cash generation potential. The aircraft engine business model involves initially selling engines at a loss, followed by decades of lucrative aftermarket revenue, particularly through customized service agreements (CSAs). It takes time before engines are utilized enough to need servicing and overhauling. As such, there can be periods where aggressively ramping engine production leads to margin pressures while aftermarket revenue from legacy engines starts to slow.

That's why CEO Larry Culp told investors that the guidance for operating profit of $6 billion to $6.5 billion in 2024 "implies flat margins year-over-year, given the growth in LEAP, initial 9X shipments for the 777X platform, and other growth investments." The LEAP engine is the sole engine option on the Boeing 737 MAX, the Comac C919, and one of two options on the Airbus A320 neo family.

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Source Fool.com