Morgan Stanley Initiates Overweight on GE Aerospace, Sets $425 Target
Morgan Stanley initiated coverage of GE Aerospace with an Overweight rating and a $425 price target, citing underestimated long-term free cash flow and strong pricing power. The bank projects free cash flow of $9.8 billion in 2027 and $11 billion in 2028 (8%–14% above consensus) and highlights a 30% valuation discount to peers.
1. Coverage Initiation and Rating
Morgan Stanley began coverage of GE Aerospace with an Overweight rating and assigned a $425 price target, arguing that the market underestimates the company’s long-term free cash flow generation and durable pricing power in the jet engine segment.
2. Free Cash Flow Forecasts
The firm forecasts GE Aerospace will generate $9.8 billion in free cash flow in 2027, $11 billion in 2028 and $12.2 billion in 2029, basing its 2028 per-share FCF estimate of $10.85 on a 39x multiple and expecting 8%–14% upside to consensus estimates.
3. Valuation Gap to Peers
GE Aerospace currently trades at roughly a 30% discount on a 2028 price-to-free cash flow basis compared with leading commercial aerospace peers, which Morgan Stanley says leaves room for multiple expansion as earnings expectations rise.
4. Balance Sheet Strength
The bank projects a net debt to EBITDA ratio of 0.7x in 2027 for GE Aerospace, providing flexibility for capital deployment supported by durable services growth and an expanding installed engine base.