UBS Says GE Now Worth $32/Share

In a report published Monday, UBS analysts maintain their Buy rating on General Electric Company GE, while raising the price target from $30 to $32. The company had emphasized during its conference call that its 2018 EPS projection remained unchanged despite the exit of GE Capital. The analysts had argued in an earlier report, published on January 21, 2015, that the move away from GE Capital would create value for the company, which was not yet reflected in the share price. The analysts expect the capital release from the exit to drive the EPS going forward. At that time, the market was more focused on the earnings shrink in the near term associated with GE Capital. According to the analysts, "GE's 4/10/15 announcement that it would exit $200B of additional GE Capital ENI with enough related capital release to fully offset lost earnings through buyback strongly confirmed our thesis, and did so in a bigger and faster way than we had modelled." "We view the asset sale environment and regulatory backdrop as supportive of a successful execution of GE's plan to realize greater asset value while reducing systemic risk," the analysts added.

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