GE Aerospace Raises Forecast. Time to Buy the Stock?
Key Points
Shares of red-hot GE Aerospace have taken a little breather following strong Q3 results and increased guidance.
The stock had risen 75% this year prior to reporting Tuesday morning, but has pulled back from an all-time high.
Nearly 90% of analysts rate the stock a buy and see 10% to 25% upside over the coming year.
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When GE Aerospace (NYSE: GE) delivered its Q3 earnings last Tuesday (Oct. 21), one could argue that the stock reflected even greater optimistic expectations for growth. Thanks to a 75% year-to-date gain, GE is not only ranked first among 79 stocks in the Industrial Select Sector SPDR Fund (NYSEMKT: XLI) but also 15th within the S&P 500.
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While the Cincinnati-based company initially delighted investors with what it called "exceptional" results and an "across the board" full-year guidance increase, its brief 4.5% opening rally -- where it spent less than five minutes at an all-time high of $315 -- was quickly met with selling, then more selling on Wednesday, which ultimately took the stock back below $300.
Image source: Getty Images.
Current holders of GE have expressed few worries, and lots to look forward to, as the company has now topped sales estimates in 13 of the past 20 quarters, Koyfin data shows, while beating EPS estimates for 12 consecutive quarters -- and 18 of the past 20 -- dating back to Q3 2020.
For those mulling a good entry point into the commercial and military jet engine manufacturer, any dip would suffice. Given that GE's Q3 results and increased forecast sparked at least five different analyst estimate revisions and price-target tweaks that moved the average return expectation over the next 12 months to $331, or about 11% above Wednesday's closing price. The most bullish analysts see the stock hitting $375, for about a 25% gain.
There's also the fact that 14 of 16 analysts who cover GE currently rate it a buy or strong buy, as well as the reality that Wednesday's 2.8% decline was its biggest 1-day drop in 2 months.
In short, long-term investors would be wise to take advantage of any weakness in GE Aerospace to initiate, or add to, a position.
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Matthew Nesto has no position in any of the stocks mentioned. The Motley Fool recommends GE Aerospace. The Motley Fool has a disclosure policy.
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