GE's Jeff Immelt Is More Optimistic On The U.S. Economy Than He Has Been In A Long Time

Jeff Immelt, the CEO of General Electric Company GE, said during an investor event that he is "more optimistic about the US economy than he has been in a long time," driven by corporate tax reform, the Ex-Im Bank and demand growth from a rebounding economy.

Analyst's Commentary

“Our own calculation around this proposal indicated that GE should indeed benefit from the plan (Brady plan) as written – though less than most others in our coverage excluding cross border adjustability,” Bernstein analyst Steven Winoker wrote in a note.

Winoker noted that GE is also a large net exporter from the United States (estimated at $18 billion–$20 billion), with border adjustments too being expected to provide a large benefit.

GE's Forecast

Meanwhile, GE reaffirmed its 2016 forecast that calls for EPS at $1.48–$1.52, with organic growth in the 0–2 percent range. Winoker expects $1.50 EPS and consensus is at $1.49.

For 2017, GE projects 3–5 percent organic growth and $1.60 –$1.70 EPS. Winoker and consensus’ EPS view stood at $1.67.

Analyst's View Of Company Guide

Commenting on GE’s outlook, Winoker said the 2016 numbers are “turning out right where we expected,” with 2017 is also “right in line.”

Further, Winoker believes GE could achieve its $2 EPS view for 2018 with the help $0.04 contribution from the Baker Hughes Incorporated BHI's deal.

Notably, the analyst expects the segment profit turning positive next year on organic growth and margin expansion.

“More interestingly, Alstom appears to be gaining traction, services are growing well, the company is continuing to see progress on its digital initiatives (that we still count as a growth option) and cash conversion has a positive roadmap,” Winoker highlighted.

Winoker rates GE at Market Perform with a target price of $33.

At time of writing, shares of GE had risen 1.17 percent on the day to $31.87.