GE Aerospace's Earnings Crossroads: Profit Growth Amid Tariff Turbulence

GE Aerospace’s first standalone quarterly earnings report since its 2024 spinoff—scheduled for April 22, 2025—will test whether its post-reorganization momentum can withstand escalating U.S.-China trade tensions. Analysts project robust financial metrics, with consensus estimates calling for a 55% year-over-year jump in earnings per share (EPS) to $1.27 and 12% revenue growth to $9.05 billion. Yet, the shadow of tariffs looms large: China’s suspension of Boeing aircraft deliveries, coupled with retaliatory trade barriers, has created a high-stakes environment for GE, which supplies engines for Boeing’s fleet.

A Strong Foundation, But Clouded Horizons

GE’s Q4 2024 results, released in January 2025, underscored its operational turnaround. Revenue rose 14% to $10.8 billion, while adjusted EPS more than doubled to $1.32. Full-year free cash flow hit $6.1 billion, a 28% increase, fueled by its FLIGHT DECK efficiency program. CEO H. Lawrence Culp emphasized the company’s “monumental first year” as a standalone entity, with plans to return $7 billion to shareholders in 2025.

The aftermarket—a key revenue pillar—remains a bright spot. Airlines’ reliance on aging fleets has driven demand for maintenance, repair, and overhaul (MRO) services, which analysts expect to remain near capacity through 2025. Wells Fargo’s Matthew Akers notes that MRO shops are operating at “near-maximum utilization,” with airlines increasingly prioritizing maintenance over new aircraft purchases. This resilience underpins GE’s bullish consensus: analysts project a 17.4% EPS rise in 2025 to $5.40, with a $230.67 average price target implying a 27% upside.

Tariffs as a Double-Edged Sword

The U.S.-China trade war, however, threatens to undercut these gains. China’s directive to halt Boeing deliveries—spurred by 145% tariffs on U.S. goods—has directly impacted GE, as its GEnx engines power Boeing’s 787 Dreamliners and 747 freighters. China Southern Airlines, for instance, paused sales of 10 used Boeing 787-10s and two GE engines, citing tariff-driven economic unviability. Analysts estimate that a 3% reduction in global aircraft demand could cut GE’s aftermarket sales by 6% and its original equipment (OEM) revenue by 10%.

The ripple effects extend beyond Boeing. GE’s supply chain faces disruptions as U.S. tariffs on aluminum and other components force renegotiations with suppliers. Lower-tier manufacturers, many based in China and Mexico, have established “war rooms” to navigate tariff complexities, with some halting deliveries entirely. While GE’s long-term contracts (e.g., aluminum sourcing) provide near-term insulation, prolonged trade tensions could strain its operational flexibility.

Citi’s Jason Gursky warns that tariff-driven cost surcharges may pressure margins, particularly for business jet manufacturers reliant on North American imports. Yet, he retains a Buy rating, citing GE’s defense-sector exposure—less sensitive to trade barriers—as a stabilizer.

Valuation and Analyst Outlook: Bulls vs. Bears

Despite risks, analysts remain largely optimistic. Wells Fargo raised its price target to $212, citing GE’s “high-quality” aftermarket moat, while Citi’s $227 target reflects cautious optimism about margin resilience. The stock’s historical performance offers traders hope: over five years, shares rose post-earnings in 58% of cases, with a median gain of 4.6%. Options markets anticipate a 6.4% price swing post-Q1 results, signaling heightened volatility.

Risks and Considerations

• Geopolitical Uncertainty: China’s stance on Boeing deliveries remains fluid, with no timeline for resolution.
• Supply Chain Fragility: Delays in component availability and cost renegotiations could delay free cash flow growth.
• Defense Diversification: GE’s 2024 U.S. Army contract ($1.1 billion) and Open Fan engine partnerships highlight its pivot to defense—a sector less tariff-exposed but requiring sustained R&D investment.

Conclusion: Navigating the Crossroads

GE Aerospace’s Q1 results will be a pivotal test of its ability to balance aftermarket resilience with tariff-driven headwinds. With a 27% upside implied by analyst targets and a shareholder-friendly capital return plan, the stock offers compelling long-term potential. However, the company’s fate is inextricably tied to U.S.-China trade dynamics and Boeing’s ability to navigate retaliatory measures.

The numbers are clear: GE’s aftermarket is firing on all cylinders, with MRO demand buoyed by aging fleets. But as tariffs threaten Boeing’s sales—and by extension, GE’s engine orders—the next earnings report will reveal whether management can pivot to mitigate risks. Investors should monitor management’s commentary on China’s demand trajectory and supply chain strategies. Until clarity emerges, GE’s stock is a bet on both its operational excellence and the geopolitical cards yet to be dealt.

With a market cap of $194 billion and a 2025 EPS growth target of 17.4%, the stakes are high. For now, the bulls have the data on their side—but the tariffs remain the wildcard.