GE Aerospace (NYSE:GE) is among the 10 best American defense stocks to buy according to Wall Street analysts. The stock has been on analysts’ radar and currently carries a Strong Buy rating, with a one-year average share price target of $358.33, representing 16.96% upside as of February 5. GE Aerospace (GE) a Strong Buy, Analysts See 17% Upside Stock market data showing an upward trajectory. Photo by Burak The Weekender on Pexels Recent updates include JPMorgan’s January 26 lift of its price target on ...

Core Viewpoint - GE Aerospace CEO Larry Culp defended the jet-engine industry's pricing practices in response to complaints from the airline industry regarding high maintenance costs and engine shortages impacting their operations [1] Group 1: Industry Pricing Practices - The jet-engine industry faces criticism from airlines over rising maintenance costs, which are perceived as excessive [1] - Culp emphasized that pricing practices are necessary to ensure the sustainability and innovation within the jet-engine sector [1] Group 2: Impact on Airlines - Airlines are experiencing strain due to engine shortages, which are exacerbating operational challenges and increasing costs [1] - The ongoing issues with maintenance and engine availability are leading to heightened concerns among airline operators [1]

Core Viewpoint - Airbus has expressed concerns regarding the availability of jet engines from Pratt & Whitney, highlighting that an agreement on the required supply volumes has not yet been reached with the U.S. manufacturer [1] Group 1 - Airbus is currently facing challenges in securing a sufficient supply of jet engines from Pratt & Whitney [1] - The lack of agreement on supply volumes could impact Airbus's production and delivery schedules [1]

Company Overview - RTX was formed in April 2020 through the merger of Raytheon and the remnants of United Technologies, following the spin-offs of Carrier Global and Otis Worldwide [6] - The stock performance since the merger has been significant, with Carrier Global up 255%, Otis Worldwide up 304%, and RTX up 93% over 67 months [6] Recent Performance - RTX stock has increased by 52% in 2025 and reached an all-time high of $181.31 on October 28 [7] - The company reported strong Q3 2025 results, with organic sales rising by 13% and adjusted earnings per share increasing by 17% [8] Analyst Ratings - Among the 21 analysts covering RTX, 14 have rated it a Buy, with an average target price of $192.05, indicating an 11% upside from the current share price [7] Backlog and Future Guidance - RTX finished Q3 2025 with a backlog of $251 billion, comprising $148 billion in commercial and $103 billion in defense-related contracts [8] - Due to its strong performance, RTX raised its guidance for 2025 [8]

Industry Overview - The aviation industry is currently facing a strong demand for air travel, which grew by 10.4% last year and is projected to continue growing at an annual rate of 4.2% through 2030 [2] - There is a significant shortage of new aircraft to meet this rising demand, with a global backlog of over 17,000 aircraft due to supply chain disruptions caused by the pandemic [3] Impact on Airlines - Airlines are expected to struggle with finding enough new aircraft to meet demand, leading to higher maintenance and leasing costs [4] - Supply chain issues are projected to cost airlines more than $11 billion this year according to the International Air Transport Association [4] Opportunities for Suppliers - The supply-demand mismatch is anticipated to benefit aircraft leasing companies, maintenance and repair companies, and manufacturers of planes, engines, and parts [5] - The iShares US Aerospace & Defense ETF (NYSEMKT: ITA) has seen a significant increase of 48% in 2025, outperforming the S&P 500 index, and is expected to continue rising as aviation industry challenges persist [5][6] ETF Holdings - The ITA ETF tracks the Dow Jones U.S. Select Aerospace & Defense Index and includes major holdings such as GE Aerospace (21.2%), RTX (16%), Boeing (8%), Lockheed Martin (4.5%), L3Harris Technologies (4.5%), and General Dynamics (4.4%) [6][7]

Core Viewpoint - GE Aerospace is experiencing significant growth driven by strong demand for jet engines and defense systems, indicating a robust recovery in the aviation sector and a positive outlook for sustained expansion through 2026 and beyond [1] Financial Performance - The third-quarter earnings for 2025 exceeded expectations, with revenue increases of over 25% in both Commercial Engines & Services (CES) and Defense & Propulsion Tech (DPT) [4] - Adjusted EPS estimates have been increased, with projections of $6.20 for 2025 (up from $5.80), $7.15 for 2026 (up from $7.05), and $8.30 for 2027 (up from $8.05) [8] Analyst Ratings and Price Forecasts - Bank of America Securities analyst Ronald J. Epstein reiterated a Buy rating for GE Aerospace and raised the price forecast to $365 from $310 following strong third-quarter earnings [2] - Other analysts have also updated their outlook, with JP Morgan raising its price forecast from $275 to $325, and UBS increasing its forecast from $344 to $366, while RBC Capital maintained a $340 price forecast [9] Growth Drivers - The CES growth algorithm is expected to remain strong, with predictions of double-digit shop visit growth in 2026 due to pent-up demand [5] - GE Aerospace's $1 billion in supply chain investments is highlighted as a key factor for improved shop visit throughput [6] - The defense segment is viewed as underappreciated, with expectations that commercial expertise will effectively transfer to the defense sector [7]

Group 1: Company Performance - GE Aerospace and GE Vernova are two of the best performing stocks of the year, each up more than 80% [1] - GE Aerospace reported a remarkable 26% organic revenue growth, driven by strong performance in commercial engines, services, and defense sectors [3] - Management raised their full-year forecast across the board, indicating confidence in future performance [3][5] Group 2: Market Reaction - Despite the strong quarterly results, GE Aerospace's stock initially sold off before rebounding significantly [2][4] - The stock experienced volatility, rallying initially and then declining before a notable rebound of $8.5 [4] - There were mixed reactions from Wall Street regarding the stock's performance following the earnings report [4] Group 3: Management and Guidance - Concerns about GE Aerospace's implicit guidance for the fourth quarter are viewed as management's conservative approach [5] - Larry Cope is highlighted as an effective executive, potentially making GE Aerospace one of the best industrial reports of the year [5]

Core Insights - General Electric (GE) reported earnings per share (EPS) of $1.66, exceeding the estimated $1.46, and showing a significant increase from $1.15 in the same quarter last year [2][6] - The company achieved revenue of approximately $11.3 billion, surpassing the estimated $10.4 billion, driven by strong sales in its commercial-engines business [3][6] - GE raised its full-year guidance for the second consecutive quarter, reflecting confidence in future performance supported by rising demand for aerospace products [4][6] Financial Metrics - GE's price-to-earnings (P/E) ratio is approximately 41.20, indicating strong investor confidence in its earnings potential [5] - The price-to-sales ratio stands at about 7.48, while the enterprise value to sales ratio is around 7.24 [5] - The company's debt-to-equity ratio is relatively low at 0.11, suggesting a conservative approach to debt management [5] - GE's current ratio of 1.05 indicates a stable liquidity position, ensuring the company can meet its short-term obligations [5]

Core Insights - GE Aerospace's stock reached a record high following strong earnings and an optimistic full-year outlook, driven by robust demand in both commercial and military aviation [1][2]. Financial Performance - The company reported third-quarter adjusted earnings of $1.66 per share, marking a 44% increase year-over-year, while revenue rose 24% to $12.2 billion, surpassing Wall Street's expectations of $1.47 EPS and $10.9 billion in revenue [2]. - GE Aerospace raised its full-year revenue growth forecast to the high teens, up from the previous mid-teens estimate, and adjusted EPS is now projected between $6 and $6.20, an increase from the prior range of $5.60 to $5.80 [5]. Market Position and Strategy - Since the completion of its first spin-off in January 2023, GE's quarterly revenue and earnings have surged by 60% and 180%, respectively, highlighting the effectiveness of its restructuring strategy [5]. - The company's stock has appreciated approximately 580% over the past three years, significantly outperforming competitors RTX and Honeywell, which saw increases of 84% and 15%, respectively [6]. Operational Efficiency - GE Aerospace's CEO emphasized the success of their proprietary lean operating model, "Flight Deck," which focuses on customer-driven continuous improvement, contributing to strong service and engine output [4].

Core Insights - General Electric (GE) has raised its annual forecast for the second consecutive quarter, driven by increased demand for jet engines and repairs due to booming air travel [1] - The company's revenue surged by 26% last quarter, reaching $11.3 billion, supported by strong maintenance work and new engine deliveries to Boeing and Airbus [1] Company Performance - GE's revenue growth of 26% indicates a robust recovery in the aviation sector, highlighting the company's strong position in the market [1] - The increase in revenue is attributed to both maintenance services and new engine deliveries, showcasing the company's diversified revenue streams [1] Industry Trends - The aviation industry is experiencing a resurgence in air travel, which is significantly boosting demand for jet engines and related services [1] - The collaboration with major aircraft manufacturers like Boeing and Airbus is critical for GE's growth, reflecting the company's strategic partnerships within the industry [1]