GE Stock In Buy Range After Huge Rally, With Earnings On Deck

General Electric (GE) plans to report earnings for the second quarter early Tuesday amid signs of improving aerospace supply chains, though challenges persist. GE stock fell in buy range Friday.

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Analysts at RBC Capital Markets anticipate Q2 growth, driven by the jet-engine business. They also expect higher GE earnings guidance for the full year. RBC analyst Deane Dray wrote in a July 12 report that he expects the company “to benefit from the nascent rebound in commercial aerospace.”

GE spun out General Electric HealthCare Technologies (GEHC) late last year. It plans to spin out its energy business, as GE Vernova, in early 2024. That will allow GE Aerospace, the so-called jewel in the portfolio, to emerge as a stand-alone company.

GE Earnings

Estimates: Analysts, on average, expect EPS of 46 cents on revenue of $14.762 billion. Year-over-year comparisons are muddied by the GEHC spinoff.

Results: Check back early Tuesday.

Outlook: Wall Street sees full-year earnings per share of $2.06, above the company’s guidance for $1.70-$2.

GE has also guided 2023 revenue growth in the high single digits and free cash flow of $3.6 billion-$4.2 billion.

GE Stock

In stock market trading Friday, GE stock shed 0.8% to 110.32. Shares of the soon-to-be aerospace pure play have ridden short-term support at their 21-day exponential moving average. In late June, they dipped to rebound from the 50-day moving average, clearing a 108.90 buy point from a three-weeks-tight pattern. The buy zone goes to 114.35.

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GE Aerospace: Improving Supply Chains

At the recent Paris Air Show, both GE and Raytheon Technologies (GE) signaled improvements in the aerospace supply chain.

The jet-engine rivals are trying to ramp up output of newer products, like GE’s Leap engine, which powers Boeing (BA) 737 aircraft. But availability of materials and shortage of workers remain issues.

Analysts are watching progress on the spinout of GE’s more challenging energy business.

“We will be listening (on the GE earnings call) to see if any of the recently reported wind turbine quality issues at Siemens (SIEGY) have surfaced at GE, to any degree,” RBC analyst Dray wrote July 12.

Amid these cross-currents, excitement about GE Aerospace has sent GE shares to a five-year-plus high.

Year to date, GE stock is up 68.3%, including a 10.6% jump in the past three months.

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