GE Aerospace will be more profitable than we had estimated: Wells Fargo (NYSE:GE)

GE Aerospace (NYSE:GE) this year is likely to be more profitable than previously estimated, analysts at financial-services firm Wells Fargo said in revising their forecast for the maker of jet engines.

“We continue to see GE’s 2024 guidance as beatable and raise our estimate by about $0.02 as we assume fewer (loss-making) new engine deliveries,” Matthew Akers, analyst at Wells Fargo, said in a June 28 report.

The revision comes as investors “appear to have concerns” about makers of jet engines, especially after aviation giant Airbus (OTCPK:EADSY) (OTCPK:EADSF) cut its target for plane deliveries to 770 from 800 previously for the year, according to Wells Fargo. Because engine makers realize most of their profits in what’s known as the aftermarket for parts and maintenance, they are somewhat buffered from declines in new-engine deliveries, the bank said.

While Wells Fargo raised its estimate of GE Aerospace’s (GE) earnings for the year, the bank cut its estimate for the recently completed second quarter.

“We are trimming GE Q2 sales estimate by about 5% on fewer engine deliveries,” according to Wells Fargo. “Our 2024 EPS estimate actually moves higher however, on fewer loss-making deliveries, while we don’t anticipate a meaningful impact to the aftermarket side of GE’s commercial engines business.”

Wells Fargo trimmed its earnings estimate for RTX (RTX), whose Pratt & Whitney unit makes jet engines.