General Electric on Thursday laid out its financial targets for the upcoming aerospace pure-play company, alongside its capital allocation strategy for the business. GE stock popped to a new high.
Early Thursday, GE Aerospace largely backed its 2024 and 2025 financial guidance. It also initiated 2028 outlook.
GE Aerospace: $10 Billion Profit Target
In 2024, the jet-engine business still expects to grow revenue by low double digits. It is targeting operating profit up to $6.25 billion and free cash flow of more than $5 billion.
GE Aerospace slightly pared 2025 revenue outlook from low double digit-high teens growth, to low double digits. It expects operating profit of about $7.3 billion at the midpoint for the year.
In 2028, it is targeting approximately $10 billion of operating profit.
In terms of capital allocation, GE Aerospace aims to deliver roughly 70-75% of cash to shareholders through dividends and share buybacks. That includes an initial dividend payout at 30% of net income, subject to board approval, and $15 billion in share buybacks.
Finally, GE Aerospace sees opportunity to use capital for mergers and acquisitions as well.
'Strong Positive' For GE Stock
"We view the capital allocation announcements as a strong positive for the company," RBC Capital Markets Ken Herbert said in a note to clients Thursday.
Capital allocation seemed to be a main focus for investors ahead of the event, Herbert added, and "the outlook is likely to surprise to the upside."
A statement from GE CEO Larry Culp on Thursday said: "GE Aerospace is ready to launch as a standalone company on April 2." The company had announced the date for its final, two-way split — as GE Aerospace and GE Vernova — earlier, on Feb. 29.
Shares of General Electric climbed 4.4% to 166.50 on the stock market today. GE stock hit a 52-week high intraday.
GE HealthCare Technologies stock edged lower Thursday.
Industrial Giant's Final Split
In 2021, an embattled General Electric announced a three-way breakup — into independent, publicly traded aviation, health care and energy companies.
Before that, the icon of American manufacturing shed a series of assets, from lighting to locomotives.
The company's health care spinoff, GE HealthCare Technologies, debuted in December 2022.
Ahead of its final split on April 2, GE is holding events this week to acquaint investors further with the emerging post-split companies — GE Aerospace and GE Vernova.
The new "GE," GE Aerospace, will keep the GE stock ticker. GE Vernova will trade under the ticker symbol GEV, the company has previously said.
The aerospace business makes jet engines and aviation systems for commercial and military customers, including Boeing. It also engages in engine repair and maintenance.
In the past year, GE stock has soared 89%, mainly due to excitement about the looming aerospace pure-play company.
GE Vernova Financial Targets
The GE Vernova investor day took place Wednesday.
At the event, management at Vernova backed 2024 financial guidance. Vernova will house GE's gas power and wind energy units.
For 2025, Vernova said it is targeting revenue growth in the mid single digits. It's also guiding free cash flow of $1.2 billion-$1.8 billion, up from $700 million-$1.1 billion expected this year.
