Wall Street investment bank Morgan Stanley (MS) has initiated coverage of GE Aerospace (GE) stock with a Buy-equivalent overweight rating and a $425 price target.
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Morgan Stanley’s target on GE stock is 35% higher than where the shares currently trade. Kristine Liwag, a top five-star rated analyst, says that the market is currently underestimating the long-term free cash flow and pricing power of GE Aerospace.
GE Aerospace became a standalone company in April 2024 following the breakup of General Electric. The aerospace company combines durable services growth with a strong balance sheet and deep competitive moat, writes Liwag in a note to clients.
GE’s Competitive Moat
The Morgan Stanley analyst notes that the aircraft engines manufactured by GE are mission-critical products with high barriers to entry, giving the company a wide and deep competitive moat, as well as sustained pricing power.
Morgan Stanley’s $425 price target on GE stock is based on 2028 estimated free cash flow per share of $10.85 at a 39 times multiple. Liwag adds that she sees a favorable risk-reward setup for GE stock this year. She adds that GE Aerospace’s stock currently trades at a 30% discount to leading commercial aerospace peers.
Is GE Stock a Buy?
GE Aerospace stock has a consensus Strong Buy rating among 12 Wall Street analysts. That rating is based on 12 Buy recommendations issued in the last three months. The average GE price target of $370.83 implies 9.55% upside from current levels.
