Top Commercial Aerospace Stocks to Watch, According to Jefferies

Investing.com -- Jefferies has identified its top picks in the commercial aerospace sector, highlighting companies positioned to benefit from rising aircraft production, aftermarket services growth, and improving profitability across the industry. The firm’s analysis focuses on manufacturers and service providers with strong cash flow potential and exposure to high-margin maintenance operations.

Here are Jefferies’ top commercial aerospace stocks:

1. Boeing - Jefferies sees multiple catalysts driving Boeing’s recovery. Key factors include higher 737 MAX production rates, rising 787 deliveries, lower losses and improved profitability in the defense business, and continued growth at Boeing Global Services. The firm believes Boeing can generate $1-3 billion of free cash flow in 2026, ultimately reaching more than $10 billion annually as production normalizes. Jefferies notes that investors remain focused on Boeing’s past problems while underestimating the earnings power from a normalized commercial aerospace cycle.

Boeing recently reported it delivered 60 aircraft in May, a 33% increase year-over-year, and is raising its 737 production rate. The company also received an updated delivery timeline from Emirates, which now expects its first 777X by mid-2027.

1. GE Aerospace - GE is Jefferies’ preferred commercial aftermarket name. While the market worries that airlines may delay maintenance spending, Jefferies argues services represent roughly 60% of Commercial Engines & Services profit. The firm highlights that LEAP engine economics are improving faster than expected, legacy CFM56 engines remain highly profitable, GE9X losses are declining, and future engine programs provide additional long-term upside. The broader thesis centers on engine manufacturers earning the majority of profits after aircraft are delivered through decades of maintenance work.

In a recent development, GE Aerospace entered into a Memorandum of Understanding with Wolfspeed to collaborate on silicon carbide technology. The company also received new coverage from Seaport Global Securities with a buy rating and a reiterated Outperform rating from RBC Capital.

1. HEICO - HEICO remains one of Jefferies’ favorite compounders. Main investment themes include growing adoption of PMA replacement components, airlines increasingly seeking lower-cost alternatives to OEM parts, expanding acceptance among government and defense customers, and an active acquisition pipeline providing another growth engine. Jefferies views HEICO as one of the clearest beneficiaries of airlines trying to reduce maintenance costs while fleets age.

HEICO announced multiple acquisitions, including Cook Defence Systems and a 90% stake in CalRamic Technologies. The company also increased its semiannual dividend by 8% and saw UBS raise its price target following strong quarterly growth.

1. FTAI Aviation - FTAI is Jefferies’ most aggressive aftermarket idea. Unlike traditional aerospace suppliers, FTAI combines aircraft and engine leasing, engine maintenance and overhaul, and engine exchange programs. Jefferies forecasts Aerospace Products will generate roughly 64% of aviation EBITDA and leasing operations about 36% of aviation EBITDA in 2026. The firm notes FTAI has the highest direct aftermarket exposure among major aerospace names, with about 80% of revenue tied to aftermarket activity.

For its first quarter of 2026, FTAI Aviation reported revenue of $830.7 million, which surpassed analyst expectations, though its earnings per share missed forecasts. The company also received a corporate family rating upgrade to Ba1 from Ba2 by Moody’s, citing lower leverage.

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