Argus Lifts Price Target On GE From $34 To $36

• General Electric Company GE shares have climbed 21 percent in the last three months, from a low of $24.31 on September 28.
• Argus’ John Eade maintained a Buy rating on the company, while raising the price target from $34 to $36.
• The divestment of GE Capital is essentially complete, and the company is poised for EPS growth in 2016, Eade stated.

As evidenced by a growing backlog of booked business, General Electric appears to be benefiting from strong new order trends, analyst John Eade said. The restructuring of GE Capital is now completed, and General Electric would be focusing on the Industrial businesses.

Management expects to invest $10-$15 billion annually in industrial growth initiatives. General Electric expects the Industrial businesses to contribute more than 90 percent of its earnings by 2018, up from 58 percent in 2014.

“We see the higher-margin backlog, solid execution in the industrial businesses, and a smaller GE Capital that provides financing for the company’s industrial customers, as strong positives for General Electric, and believe that GE stock remains attractively priced based on a range of valuation metrics,” Eade wrote.

CEO Jeffrey Immelt indicated that he expects “slow growth” and a “volatile world” in 2016. Management projected 2016 EPS at $1.45-$1.55, representing 11-19 percent growth the Argus estimate for 2015. The company also projected 2%-4 percent organic growth in 2016.

While Aviation, Power, Renewable Energy and Healthcare are expected to be the top-performing business segments, Oil & Gas and Transportation are likely to be laggards. The analyst mentioned that General Electric’s EPS would be boosted in 2016 by the current restructuring efforts, the Alstom acquisition, and share buybacks.