UPDATE: J.P. Morgan Downgrades General Electric to Neutral Following Friday Report
In a report published Monday, J.P. Morgan analyst C. Stephen Tusa Jr. downgraded the rating on General Electric Company (NYSE: GE) from Overweight to Neutral, and lowered the price target from $24.00 to $22.00.
In the report, Tusa noted, “We are downgrading GE to Neutral after recommending the stock for over three years. It is not our style to move ratings in the direction of news flow, but we view Friday's report as more of an exclamation point on the last six months that has made it impossible to stick with a key tenet of our rating. The pitch that GE is a ‘safety stock' when times get tough, highlighted by a best-in-class performance last downturn, was a cornerstone to our call that is now increasingly hard to defend. Additionally, with lower growth, and now a best case 70bps of margin this year, Industrial profit growth of ~7% is now mediocre versus the group, and we see above average 2H risks. Our prior sum of the parts used to have GE Industrial at a premium, which we are now removing. We could play the Sell Side ‘wait it out' game, as reversion often works over time, but with 2Q also looking soft we think the stock is dead money near term.”
General Electric Company closed on Friday at $21.75.
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