GE Aerospace stock forecast ahead of earnings: buy, sell, or hold?

GE Aerospace stock price continued its strong bull run this year and was trading at $325. It has jumped by 105% from its lowest point in April last year and is hovering near its all-time high of $332.5. This surge has brought its market cap to over $342 billion. Will the GE shares jump after its earnings?

GE Aerospace’s business is booming

General Electric Aerospace has done well this year, helped by the ongoing boom of the civil and defense aviation industries. It has also done well after the company separated from the healthcare and energy businesses.

GE Aerospace has benefited from the ongoing boom in the civil aviation industry and surge in orders. Boeing has a backlog of over 5,900 planes, while Airbus has over 8,754 orders. This is important as GE Aviation is the biggest supplier of engines.

At the same time, the number of flying hours has jumped, a move that has benefited its services segment. As a result, its annual revenue rose to $38 billion in 2024, up from $35 billion in the previous year.

The most recent results showed that GE Aerospace’s orders rose by 2% in the third quarter to over $12.8 billion. Its revenue rose by 24% in the third quarter to over $12.2 billion, while its profit rose by 33% to $2.5 billion.

GE Aerospace’s revenue growth has coincided with the growing margins and free cash flow, a trend that may continue in the coming years. This growth happened as the company won new orders from companies like Korean Air and Cathay Pacific.

GE Aerospace earnings and valuation 

The next key catalyst for the GE stock price will be its earnings, which will come out on January 22nd. These numbers will provide more information about its business and what to expect in the coming years.

Wall Street analysts anticipate that its revenue growth continued in the final quarter of the year. The average estimate is that its revenue will come in at $11.2 billion, up 13.39%. 

If this is accurate, the company’s revenue will be $41.73 billion, up by 18% YoY.  Analysts also expect that the company’s guidance will show that its revenue will be $10.1 billion in the first quarter, up by 13.9%.

The main concern about GE Aerospace stock is that it has become a highly overvalued company. 

Data compiled by Seeking Alpha shows that its forward price-to-earnings (PE) ratio is 45, higher than the sector median of 25.8. Its forward non-GAAP PE ratio has moved to 52, also higher than the five-year average of 42.

These numbers mean that the company has a higher valuation than Nvidia, a company that is growing at a faster pace and has higher margins.

GE Aerospace stock price technical analysis 

The daily timeframe chart shows that the GE stock price has rebounded in the past few weeks, moving from a low of $280 in December.

It recently moved above the important resistance level at $315, its highest level in October last year. The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA) and formed a bullish pennant pattern. The Supertrend indicator has turned green.

Therefore, the stock will likely have a strong bullish breakout, potentially to the key resistance level at $350. A move above that level will point to more gains to $400.

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