Friday, 14 June 2024

Why GE Aerospace Is Losing Altitude Today

by BD Banks

A prominent Wall Street analyst has some doubts about GE Aerospace‘s (NYSE: GE) current quarter, and investors are taking note.

Shares of GE Aerospace traded down 4% as of 11:30 Eastern after JPMorgan Chase cut its second-quarter sales estimate to an analyst-low $8.4 billion.

Supply chain chaos could eat into deliveries

GE Aerospace is the last remaining part of the one-time industrial conglomerate now that the healthcare and energy assets have been spun off as independents. The company is a major producer of aircraft engines and other components.

JPMorgan’s Seth Seifman is worried that continued supply chain constraints could hamper new engine deliveries and weigh on results in the current quarter. The analyst set a quarterly revenue target about $400 million below the $8.8 billion Wall Street consensus.

He also believes there could be risk to GE Aerospace’s full-year delivery target.

It’s worth noting that as a new program ramps up, initial deliveries are recorded at a loss, so the forecast does not affect GE Aerospace’s adjusted earnings or cash flow estimates. Seifman is keeping an overweight rating on the stock with a price target of $175.

Is now the time to buy GE Aerospace?

Note that while Seifman is pessimistic about the near term, he remains optimistic over the long haul. Investors would be wise to do the same.

The aerospace industry today is enjoying robust demand, but it’s also facing significant headwinds from supply chain difficulties and continued woes at Boeing. In time, these will be worked out, and the demand will fill out order books for years to come.

Investors who can handle a little turbulence along the way should be well rewarded over time.

Should you invest $1,000 in GE Aerospace right now?

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.