Shares of GE Aerospace traded notably higher during Friday's session, outpacing the broader market's gains. The stock's rise followed a significant analyst endorsement and a key commercial announcement involving a major airline customer.
Wall Street Endorsement
Morgan Stanley commenced coverage on GE Aerospace, assigning the stock an Overweight rating. The firm established a price target of $425 per share. Analyst Kristine Liwag highlighted that the market may not be fully valuing the company's long-term free cash flow generation or its pricing power within the lucrative aftermarket services segment. The bank's valuation incorporates an estimated free cash flow of $10.85 per share for the year 2028, applying a multiple of 39 times.
Strategic Customer Agreement
In a separate development, American Airlines and CFM International, the engine joint venture between GE Aerospace and France's Safran, announced an extension of their existing agreement. The carrier will continue to use CFM LEAP-1A engines to power its future deliveries of Airbus A321neo aircraft, coupled with a long-term maintenance service contract. American's current fleet includes 84 A321neo and 5 A321XLR jets, with a backlog of 120 additional A321neo and 35 A321XLR planes scheduled through 2032. The airline also holds options for 116 more Airbus A320neo-family aircraft.
American Airlines CEO Robert Isom described the continued partnership as "exciting" as new aircraft arrive. GE Aerospace CEO Larry Culp expressed pride in "powering" the airline's next-generation fleet.
Market Performance and Context
As of mid-afternoon trading on Friday, February 20, 2026, GE Aerospace shares were up approximately 2% to $341.50. This performance significantly exceeded the S&P 500 index, which was up about 0.5% on the day. The positive movement underscores investor focus on the company's high-margin services business, which generates recurring revenue from maintenance, repairs, and spare parts long after the initial engine sale.
For GE Aerospace, the financial model is clear: while the initial engine sale is important, the substantial and more predictable earnings are derived from the ongoing service lifecycle. The market typically ascribes a higher valuation to these stable, cash-generating service streams compared to the more cyclical manufacturing revenue.
Peer Comparison and Risks
Not all aerospace peers moved in tandem. Shares of RTX, which competes in the narrowbody engine market through its Pratt & Whitney division, declined roughly 0.5%. The divergent performance highlights the company-specific nature of the day's news.
Morgan Stanley's analysis also outlined a wide range of potential outcomes, reflecting the inherent risks. The firm's bull-case scenario values the stock at $615, while its bear case sits at $230. This spread indicates that long-term cash flows could vary significantly based on factors such as service volume, pricing power, travel demand, and repair network efficiency.
Looking Ahead
Investors are now looking toward the company's upcoming financial report. GE Aerospace is scheduled to announce its first-quarter 2026 results on April 21. Market participants will scrutinize the release for updates on engine shipment rates, service pricing trends, and the company's plans for cash returns to shareholders.
The combination of a prominent Wall Street firm initiating bullish coverage and the securing of a long-term service agreement with a major airline provides a dual catalyst for GE Aerospace, reinforcing the strategic importance of its aftermarket operations in driving future shareholder value.
