General Electric (NYSE:GE) delivered better-than-expected third-quarter earnings on October 24. However, supply-chain headwinds continue to raise concerns over the deliveries of LEAP jet engines, which could adversely impact GE’s Commercial Engines revenues.
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The Commercial Engines revenue grew 23% during the third quarter, with LEAP deliveries up 12% year-over-year. However, the company expects LEAP deliveries to be lighter in 2023 than what it previously anticipated. GE expects deliveries to increase by 40% to 45% in 2023, down from its previous growth target of 50%. Moreover, for 2024, the growth rate is likely to decelerate further as the company projects a 20% to 25% increase in deliveries.
GE’s management highlighted that the company’s revenue and margins will likely benefit from higher volume, improved pricing, and productivity measures. However, supply-chain headwinds are expected to hurt LEAP deliveries and its financials. Nonetheless, the strength in the overall Aerospace division and improvement in GE’s Vernova segment led the management to raise its full-year revenue and earnings forecast.
GE now expects its organic revenue to increase at a low teens rate in 2023, up from its previous expectation of low-double-digit growth. Meanwhile, it projects its adjusted earnings to be between $2.55 to $2.65 per share, up from its earlier outlook of $2.10 to $2.30. With this backdrop, let’s look at what the Street recommends for GE stock.
What is the Prediction for GE Stock?
Despite the supply-chain headwinds, Wall Street analysts maintain a bullish outlook for GE stock, with Goldman Sachs analyst Joe Ritchie and Bank of America Securities analyst Andrew Obin reiterating a Buy rating following the Q3 print.
Ritchie said, “GE is a unique collection of assets with under-earning potential and a strong management team to execute the turnaround.”
Overall, GE’s focus on streamlining its business and reducing debt keeps analysts upbeat. GE stock has received 11 Buys and three Holds for a Strong Buy consensus rating. Further, General Electric stock has gained over 74% year-to-date. Meanwhile, the average GE stock price target of $132.15 implies 16.31% upside potential from current levels.
