Defense and aerospace stocks have enjoyed a remarkable 2024, with the iShares US Aerospace & Defense ETF (ITA) returning 22% year-to-date. RBC analyst Ken Herbert offers insights on the industry’s outlook, including his analysis of key players like Boeing, General Electric, General Dynamics, and Airbus.
GE Aerospace (GE), spun off from General Electric earlier this year, has been a strong performer, outpacing both the broader market and the original GE conglomerate. However, the author believes that further upside is unlikely, given the company’s lofty valuation and potential challenges. GE Aerospace faces competition from established players like Honeywell (HON), Northrop Grumman (NOC), and Lockheed Martin (LMT), and its future growth may be limited by factors such as increased working capital requirements. While GE Aerospace remains fundamentally sound, the author downgrades the stock to a “Hold” rating.
General Electric Co. (GE) has raised its full-year profit guidance for its aerospace business, citing a surge in revenue from commercial aircraft engines and services. Operating profit is now expected to reach $6.2 billion to $6.6 billion, up from the previous estimate of $6.5 billion. The positive outlook reflects increased demand for air travel and airlines extending the use of their existing aircraft due to production challenges at Boeing.
