UBS elevated its price target on GE Aerospace to $374 from the prior $368, while upholding a Buy recommendation on the aerospace and defense firm. This revised target brings the estimate close to the analyst high of $394, signaling confidence in the company’s growth trajectory based on the latest quarterly results.
The increase in price target followed GE Aerospace’s fourth-quarter 2025 earnings release, which UBS characterized as "solid overall with strong underlying fundamentals." The investment bank noted that the company’s guidance appeared cautious, leading to a boost in UBS’s own projections. Over the previous twelve months, GE Aerospace realized revenue growth of 18.48%, reflecting substantial top-line momentum.
A standout feature from the quarter was the 18% surge in Commercial Engine Services (CES) orders, surpassing UBS’s expectations. The firm also highlighted a 1.22X book-to-bill ratio for 2025, supporting the case for potential upside above management’s mid-teens growth guidance. This represented an improvement over forecasts from the prior quarter.
Geographically and operationally, the CES margin outperformed, coming in 80 basis points above both UBS and consensus forecasts. Nonetheless, the positive impact was partially offset by increased corporate expenses. UBS maintains an optimistic view that CES margins can improve further in 2026 and in subsequent years.
Despite these encouraging fundamentals, GE Aerospace shares declined by 7% after the earnings announcement. UBS attributed the stock’s pullback to the high expectations already embedded in its valuation. Supporting this perspective, data shows the stock has fallen approximately 9.26% during the past week. With a price-to-earnings ratio of 36.03, the shares trade well above the Fair Value mark calculated by InvestingPro, indicating potential overvaluation despite a strong one-year gain of nearly 48%.
Looking ahead, UBS increased its earnings before interest and taxes (EBIT) estimates by an average of 3% for the 2026 to 2030 period. The bank forecasts EBIT reaching $14.3 billion by 2028, which implies about a 13% upside relative to consensus and roughly 60% growth compared to 2025 results.
Additional positive results include adjusted earnings per share of $1.57 in Q4 2025, exceeding the consensus estimate of $1.43. Revenues also topped analyst forecasts, reaching $11.87 billion versus the expected $11.2 billion. The Commercial Engine Services division was a key driver, posting 31% year-over-year growth.
Even with this strong earnings showing, the stock’s recent price dip suggests market concerns surrounding valuation metrics. Other financial institutions such as RBC Capital continue to hold positive views on GE Aerospace, emphasizing the robust quarterly performance.
The recent developments underscore the company’s solid operational execution and ongoing growth prospects in the aerospace sector, although market participants remain cautious about near-term valuation levels and cost pressures.