GE Aerospace's (GE) could see upside to estimates despite recent stock weakness tied to oil price concerns, with strong backlog and demand trends supporting a favorable outlook, Morgan Stanley said in a report Wednesday.
Shares fell about 6% following Q1 results, underperforming the broader market despite an earnings beat and reaffirmed guidance, as investors focused on potential operational risks if "oil prices stay elevated." The investment bank said the reaction appears "overdone" given solid "forward visibility" and resilient sector demand, the report said.
GE's roughly $210 billion backlog, including about $170 billion in Commercial Services, provides visibility into Q2 and full-year 2026, supported by strong "spare parts" demand and "shop visit" activity. Analysts at Morgan Stanley said "demand continues to outpace supply," pointing to rising spare parts delinquency alongside revenue growth, according to the report.
The company also continues to benefit from strength in defense-related demand, with elevated utilization of military platforms expected to support "aftermarket" activity.
Morgan Stanley reiterated an overweight rating on GE Aerospace while lowering the price target to $400 from $425 to reflect valuation adjustments, adding that the recent pullback presents an "attractive opportunity."
Price: $273.37, Change: $-13.36, Percent Change: -4.66%