I withdraw the sell and raise my twelve-month target to $291.82. Higher earnings and an earlier easing of new-engine losses narrow the downside. The market now looks about right, although acquisition funding limits the upside.
Key points
- $8.05 a share is the midpoint of raised 2026 adjusted earnings guidance.
- $10.81 a share is my rebuilt 2028 earnings forecast, above my previous estimate.
- $291.82 a share is my October 2027 target; I withdraw the sell.
The call
The market is about right after today's update. At my 27-times earnings multiple, the share price requires $11.14 of 2028 earnings per share. That means a 22.6% operating margin on my sales forecast, not the exceptional profitability my earlier sell case implied.
Repairs dominate sales, but new engines are growing faster ($ billions)Source: GE September 30, 2026 10-Q, filed October 20; DPT includes propulsion technologies.
Profits should improve sooner than I expected. Management now sees GE9X launch losses easing from 2028, while maintenance orders support growth through weak airline traffic. I forecast 12.5% commercial-services growth in 2027. January's full-year outlook should test whether repair profits offset new-engine losses.
Valuation
| My estimate or assumption | Figure |
|---|
| 2028 organic adjusted revenue, excluding the acquisition | $63.6 billion |
| 2028 organic adjusted operating margin | 22% |
| 2028 adjusted earnings per share, including the acquisition | $10.81 |
| Base October 2027 earnings multiple | 24 times |
| Repair-franchise premium within target | $32.42 a share |
| October 2027 target | $291.82 |
Adjusted earnings exclude insurance and specified accounting items. My bridge deducts $900 million of organic financing costs, applies a 16% tax rate and uses 1.01 billion diluted shares for 2028. Consolidated Precision Products adds little after new borrowing and lost cash interest; I assume partial cost savings.
The premium adds three times earnings for recurring repairs; faster retirements would remove it. Higher funding costs constrain that premium, while weak relative returns over three, six and twelve months argue against calling the pullback a bargain. Hold replaces Sell because higher earnings narrow the downside, not because the business lacks risk.
The 2028 profit margin decides the twelve-month targetAnalyst scenarios, October 20, 2026; same sales, financing, taxes, shares and 27-times earnings multiple.
Risks
- Faster repair output could lift profits above my forecast; watch overdue parts and services margins.
- Costlier fuel could weaken airline spending; watch retirements and maintenance orders.
- Acquisition financing could consume more cash; watch borrowing terms and slower share repurchases.
What would change my mind
I would turn positive if 2027 reporting supports a sustainable 2028 organic operating margin above 23% without temporary cash releases.