Rise in General Electric's Share Price Today
General Electric Expects Strong Growth and Operational Improvements Through 2028
General Electric (GE) has announced a positive outlook for its future growth and operational improvements, particularly in its key business segments of Aerospace, Military Aerospace, and the combined Power and Renewables division (Vernova).
In the Aerospace segment, GE anticipates double-digit annualized revenue growth from 2024 through 2028. This growth is driven by the expanding commercial installed base, especially from LEAP and GE9X engines, as fleets mature and maintenance work increases. The defense and military aerospace segments are also expected to benefit from resilient defense spending and a favorable product mix, contributing to mid-single-digit growth in revenue and low-single-digit net price increases. Profit growth is expected to be double-digit, reaching approximately $11.5 billion by 2028, with mid-teens earnings per share (EPS) growth and near full conversion of net income to free cash flow estimated at about $8.5 billion by 2028.
Regarding the combined Power and Renewables division, now branded as Vernova, while specific updated projections were not detailed, the broader energy market context indicates a growth environment due to robust industrial load growth and long-term load growth expectations of about 3% annually through 2029 in related power sectors. This supports a positive outlook for Vernova, given GE's strategic focus on renewable energy and power technologies.
The spin-off of Vernova is expected to be a focus during the upcoming investor conference in March. RBC Capital analyst Deane Dray has raised his price target on General Electric's stock from $87 to $93, reflecting confidence in the company's prospects.
In the aerospace sector, GE Aerospace expects a 15% earnings growth with flat profit margins compared to 2022. Internal improvements in GE's aerospace division are expected to yield sequential output improvements as the year progresses. Shares in industrial conglomerate General Electric (GE) have risen 2% by midday today.
The war in Ukraine has changed policy discussions on investment in gas, nuclear, and renewables, which is beneficial for Vernova's prospects going forward. Aircraft engines are typically sold at a loss, with profit being made from multidecades of aftermarket sales. The policy discussions on investment in gas, nuclear, and renewables are expected to have a significant impact on Vernova's future prospects.
At the recent Barclays Industrial Select Conference, CEO Larry Culp had positive comments about all three of General Electric's remaining businesses. The investor conference in March will provide insights into GE's plans for 2024, particularly regarding the Vernova spin-off. Wall Street analysts typically wait until after an event like General Electric's investor conference before changing price targets and ratings.
CEO Larry Culp's recent presentations have given confidence to investors and the analyst community. The current trading price of General Electric's stock is approximately $85. The pressure on energy caused by the war in Ukraine has made the investment landscape in gas, nuclear, and renewables "fundamentally better" than it was 12 months ago, which bodes well for Vernova's future.
In summary, GE’s Aerospace and Military Aerospace businesses have a positive and growing outlook backed by high backlog levels, operational improvements, and defense resilience. Vernova, representing Power and Renewables, benefits from favorable long-term energy demand trends supporting steady growth. GE’s overall financial health and guidance reinforce confidence in these businesses’ prospects through 2028 and beyond.
- General Electric's financial health is expected to improve significantly in its key business segments, with the Aerospace and Power and Renewables divisions showing particularly strong growth prospects.
- GE's Aerospace segment anticipates earnings growth of 15% with flat profit margins, driven by the expanding commercial installed base and maturing fleets, while the Power and Renewables division, named Vernova, benefits from favorable long-term energy demand trends.
- Investors and analysts have expressed confidence in General Electric's prospects, as the company continues to focus on operational improvements and developing its growth industries – finance, business, and investing, particularly in the finance industry.
