TLDR
- Morgan Stanley initiated GE Aerospace coverage with an Overweight rating and $425 price target
- The $425 target is 35% above current trading levels, with a bull case of $615
- Analyst Kristine Liwag says the market underestimates GE’s long-term free cash flow and pricing power
- Morgan Stanley forecasts GE free cash flow reaching $13.5 billion by 2030, 8–14% above consensus
- GE stock trades at a 30% discount to commercial aerospace peers on a 2028 price-to-free-cash-flow basis
Morgan Stanley initiated coverage of GE Aerospace on Friday with an Overweight rating and a $425 price target, sending the stock up about 2.4%.
The price target sits 35% above where GE currently trades. Analyst Kristine Liwag, a five-star rated analyst, argues the market is not fully pricing in the company’s long-term cash generation potential.
GE Aerospace became an independent company in April 2024 after the historic breakup of General Electric.
Liwag points to the company’s aircraft engine business as a key strength. Engines are mission-critical products with high barriers to entry, which supports sustained pricing power and above-trend growth over time.
Morgan Stanley‘s $425 target is based on 2028 estimated free cash flow per share of $10.85 at roughly a 39 times multiple.
The bank also laid out a wide range of outcomes. The bull case stands at $615, while the bear case sits at $230 — what Morgan Stanley calls a favorable risk-reward setup.
Free Cash Flow Outlook
Morgan Stanley’s free cash flow forecasts are notably above Wall Street consensus. The bank projects $9.8 billion in 2027, $11 billion in 2028, $12.2 billion in 2029, and $13.5 billion in 2030.
Those numbers run 8% to 14% above consensus between 2027 and 2030. Cumulative free cash flow from 2028 to 2030 is estimated at about 12.5% above what the broader analyst community expects.
The bank credits services growth, a rising installed base, more engine shop visits, and continued aftermarket pricing strength as the main drivers behind those higher estimates.
Morgan Stanley also flagged that consensus forecasts for 2027 and 2028 free cash flow have already been moving higher — and it expects that trend to continue.
Valuation Gap
One of the more eye-catching points in the note is valuation. GE Aerospace trades at roughly a 30% discount to its leading commercial aerospace peers on a 2028 price-to-free-cash-flow basis.
Morgan Stanley says that gap creates room for multiple expansion alongside earnings estimate increases.
On the balance sheet side, the bank projects GE Aerospace’s net debt to EBITDA at 0.7 times in 2027, which it described as providing flexibility for capital deployment.
GE Aerospace currently holds a consensus Strong Buy rating among 12 Wall Street analysts, all of whom have issued Buy recommendations in the last three months.
The average price target across those analysts is $370.83, implying about 9.55% upside from current levels — well below Morgan Stanley’s more aggressive $425 call.
GE stock gained about 1.5% in premarket trading on Friday before extending those gains during the session.
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