Al Root

Based on the reaction to its earnings, GE Aerospace must have said something troubling about the company or the outlook for the aerospace and defense. It didn't.

The slide in the price -- one analyst described it as an overreaction -- looks like an opportunity to buy the stock.

On Thursday, GE E Aerospace reported better-than-expected fourth-quarter earnings per share of $1.57, while Wall Street was looking for $1.44. It was the 13th consecutive outperformance, according to Bloomberg.

What is more, the outlook for 2026 profit is strong. Management expects operating profit of between $9.85 billion and $10.25 billion. The midpoint of that range is $10.05, a touch short of Wall Street's $10.1 billion projection.

Still, the stock dropped 7.4% to close at $295. It was the worst reaction to a quarterly report since the third quarter of 2024, when shares fell 9%.

The stock's starting point helps explain the drop. Coming into earnings, GE Aerospace stock was up 69% over the past 12 months, leaving shares trading at about 44 times the earnings Wall Street expects over the next 12 months.

Earnings beats, high valuations, and strong stock performance could lead some management teams to assume everything is fine. That doesn't seem to be the case, though.

"There's a long history within our company of confidence...perhaps overconfidence," CEO Larry Culp tells Barron's. "That's not who we are, who we want to be today."

Culp, a devotee of lean management techniques pioneered in Japan, remains focused on GE's three key "behaviors": Respect for people, continuous improvement, and customer-driven focus.

Beyond a bottom-line earnings beat, Culp seemed happiest with his company's efforts to improve performance at GE Aerospace's suppliers. "To me, the standout number is that 40%...increase in deliveries from our priority supplier."

Delays in deliveries can upset the entire production system. The focus on improving the supply chain and the progress in doing so are signs that GE Aerospace is doing what it needs to do, rather than being hampered by that historic "overconfidence."

As for the stock, Wall Street isn't worried. The guidance "has upside, assuming supply chain gains compound," wrote TD Cowen analyst Gautam Khanna. "GE suggested that its calendar year 2028 targets also have upside given steady [engine] demand."

GE Aerospace's long-term goals imply double-digit earnings growth between 2024 and 2028, culminating in $11.5 billion in 2028 operating profit. Those goals are looking, well, conservative now.

Khanna rates shares Buy and has a $350 price target for the stock. Citi analyst John Godyn rates shares Buy. He raised his price target to $380 from $378 following the earnings report.

The "over-reaction to conservative guidance sets up enhanced buying opportunity," Godyn wrote on Thursday. He sees several things going the company's way in 2026, including strength in the parts and service operation and improved business execution.

"No stopping the growth engine," wrote BofA Securities analyst Ron Epstein on Friday, echoing the view that the post-earnings selloff was "overdone." He rates shares Buy and has a $365 price target for the stock.

Overall, 77% of analysts covering GE Aerospace stock rate it Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for GE Aerospace stock is about $361.

GE Aerospace stock fell 0.4% on Friday, closing at $293.87, while the S&P 500 was flat and the Dow Jones Industrial Average dropped 0.6%.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 23, 2026 16:52 ET (21:52 GMT)

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