GE Aerospace, a subsidiary of General Electric, has released its third-quarter 2024 earnings report, revealing a mixed bag of performance. While the company demonstrated solid overall growth, some key segments fell short of expectations.
The report showed that GE Aerospace achieved adjusted revenue growth of 6% year-over-year, reaching $8.943 billion, exceeding the analyst consensus of $9.022 billion. GAAP revenue stood at $9.84 billion. The company maintained its forecast for high single-digit adjusted revenue growth and raised its adjusted EPS guidance to $4.20 – $4.35, up from the previous range of $3.95 – $4.20. The new guidance also surpasses the consensus estimate of $4.25.
However, a closer look at the segment performance reveals some areas of concern. Despite the positive revenue figures, segment EBIT fell short of analyst expectations. While the commercial engine segment remains a significant driver of growth, the defense segment lagged behind, recording lower revenue and margins.
In response to the report, Noah Poponak, an analyst at Goldman Sachs, expressed a mixed view of the results. He acknowledged the strong overall performance, but highlighted the underperformance in the defense segment. Despite this, Goldman Sachs maintains a ‘Buy’ rating on GE Aerospace, with a price target of $201. The analyst anticipates EPS of $4.12 for FY24, $5.16 for FY25, and $6.30 for FY26.
For investors looking to gain exposure to GE Aerospace, the IShares U.S. Aerospace & Defense ETF (ITA) and the TCW Transform Systems ETF (NETZ) offer potential avenues. Following the release of the earnings report, GE shares experienced a significant drop of 8.69% to $177.36 at the time of this writing.
The mixed performance highlighted in the report underscores the complexity of the aerospace and defense industry. Despite the overall positive revenue growth, the underperformance in the defense segment raises questions about the future trajectory of the company. Investors will be closely watching to see how GE Aerospace addresses these challenges in the coming quarters.