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GE: Defense Demand Will Support Aerospace Earnings And Shareholder Returns

Next Generation Engine Technology Will Drive Decarbonized Global Aviation

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GE
AnalystHighTarget
Not Invested
Published 08 Jun 2025

Update shared on 21 Dec 2025

Fair value Increased 16%
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Analysts have raised their price target for General Electric from approximately 340 dollars to 394 dollars, reflecting higher expected revenue growth and a modestly richer future earnings multiple, despite slightly lower projected profit margins and a marginally reduced discount rate.

What's in the News

  • The Pentagon is pressing U.S. missile suppliers, including GE Aerospace, to double or even quadruple missile output in anticipation of a potential future conflict with China, signaling sustained demand for advanced defense propulsion systems (Wall Street Journal).
  • Defense Secretary Pete Hegseth has ordered an urgent gathering of most top U.S. military commanders at a Virginia Marine Corps base, highlighting elevated defense readiness that could reinforce long term spending on contractors such as GE Aerospace (Washington Post).
  • GE Aerospace raised its 2025 operating profit guidance to a range of 8.65 billion dollars to 8.85 billion dollars, up from 8.2 billion dollars to 8.5 billion dollars, underscoring growing confidence in commercial and defense demand.
  • The company continues to return capital to shareholders, completing repurchases of approximately 52 million shares, or 4.82 percent of its share count, for just over 10.2 billion dollars under its existing buyback authorization.
  • Large new engine deals with Emirates, flydubai, and Saudia, centered on GE9X and GEnx 1B engines and long term service agreements, reinforce GE Aerospace's dominant position on Boeing widebody platforms and expand its recurring service revenue base.

Valuation Changes

  • Fair Value: increased from approximately $340 to $394, representing a moderate upward revision to the intrinsic value estimate.
  • Discount Rate: edged down slightly from about 7.75 percent to 7.70 percent, modestly lowering the required return applied to future cash flows.
  • Revenue Growth: raised meaningfully from roughly 9.6 percent to 12.0 percent, reflecting stronger expected top line expansion.
  • Net Profit Margin: reduced slightly from about 18.9 percent to 18.1 percent, indicating modestly lower anticipated profitability on each dollar of sales.
  • Future P/E: increased from around 41.0x to 44.1x, implying a somewhat richer valuation multiple on expected earnings.

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