RBC: GE Aerospace Guidance Raise Tempered by Aftermarket Constraints

RBC Capital Markets raised its price target on GE Aerospace (GE) after the company reported strong Q2 results and lifted its full-year guidance. However, analyst Ken Herbert noted that the aftermarket cycle remains a constraint.

Recommendation Change

• New Price Target: $220 (from $200)
• Rating: Outperform

Analyst Rationale

Herbert believes the guidance raise reflects strong momentum in commercial and defense engine businesses, but warned that the peak of the aftermarket cycle could limit future gains. He added that demand for spare parts and services remains high, but supply chain pressures may impact growth.

Context

The adjustments come after GE Aerospace reported Q2 revenue of $12.5 billion (up 8% YoY) and EPS of $2.45, beating analyst estimates. The company also raised its 2026 guidance to a revenue range of $54-56 billion and EPS of $10.50-11.00.

Conclusion

Analysts remain optimistic about GE Aerospace's long-term prospects, but supply chain and aftermarket cycle challenges warrant caution. Investors are advised to monitor service and parts demand trends.