GE's CPP Deal Isn't About EPS Accretion, Says Jefferies — It's 'An Impactful Move In The Blades & Vanes War Games'

• Jefferies keeps a ‘Buy’ rating and $455 price target on GE shares.
• The firm also highlighted that multiples for Howmet Aerospace and DPC Holdings have compressed as investors price in the risk of increased competition.
• GE Aerospace CEO stated that investing in mission-critical casting capacity is needed to support the strong simultaneous demand across commercial engines, aftermarket, and defense.

Following GE Aerospace's (GE) $11.75 billion acquisition of castings supplier Consolidated Precision Products, Jefferies estimates the deal could be adding roughly 1.5% to the 2028 EPS forecast of $10.25. 

According to TheFly, Jefferies believes the acquisition is "an impactful move in the Blades & Vanes War Games" as a reference to the escalating race among engine makers and suppliers to control critical component manufacturing.

GE's Acquisition Of Consolidated Precision Products

GE Aerospace said on Tuesday it would buy castings supplier Consolidated Precision Products (CPP) from investment firms Warburg Pincus and Berkshire Partners for $11.75 billion, marking the company's largest deal since it became a standalone business following its 2024 spinoff.

The move comes as engine makers race to increase output and ease supply-chain risks that have constrained production, with strong demand for new aircraft and aftermarket spare parts continuing to drive orders.

"Investing in mission-critical casting capacity is needed to support the strong simultaneous demand across commercial engines, aftermarket and defense," said GE Aerospace CEO Larry Culp. "By combining GE Aerospace's technology capabilities and flight deck with CPP's manufacturing experience, we expect to expand capacity, improve performance and accelerate new engine technologies for the current fleet and next-generation platforms."

Jefferies maintained its ‘Buy’ rating and $455 price target on GE shares. The analyst points to other players moving to self-produce blades and vanes, while GE now brings a meaningful portion of its own demand in-house through the CPP deal.

That shift has already shown up in valuations: multiples for Howmet Aerospace and DPC Holdings have compressed as investors price in the risk of increased competition from OEMs bringing production in-house.

Retail Take On GE-CPP Deal

On Stocktwits, retail sentiment around GE remained ‘neutral’ over the past 24 hours.

One user sounded skeptical about the financial terms of the deal.

https://stocktwits.com/Akisawada/message/663779605

GE stock has gained nearly 5% this year.

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