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Argus Says Buy Weakness In General Electric Shares

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Argus sees a buying opportunity in recent weakness in General Electric Company (NYSE: GE) shares. The firm believes GE is poised to generate high single-digit earnings growth over the next five years.

“We believe that GE will continue to benefit from its renewed focus on its Industrial businesses, as well as from its strong presence in the power generation, aviation and healthcare markets,” John Eade wrote in a note.

The analyst, who has a Buy rating and $36 target price on shares, sees further upside from the sizable backlog, solid execution in the industrial businesses, and a smaller GE Capital.

GE gas been underperformers in the past quarter, sliding 10 percent versus a 1.6 percent decline in the S&P 500.

GE narrowed its 2016 EPS guidance to $1.48-$1.52 from $1.45-$1.55. Management also lowered its organic revenue growth forecast to 0-2 percent from 2-4 percent, but raised its cash flow from operations forecast to more than $32 billion from $29-$32 billion.

“Underlying trends in the Industrial businesses are positive, and we expect to see an improvement in EPS growth once the transformation is complete,” Eade continued.

Based on recent margin trends, the analyst cut his 2016 EPS forecast to $1.52 from $1.55, still implying growth of 15 percent this year on restructuring, the Alstom acquisition, and share buybacks.

The analyst also trimmed his 2017 EPS forecast to $1.72 from $1.75, though “we continue to expect growth based on margin expansion and a recovery in the Oil & Gas business.”

At time of writing, shares of GE were down 0.07 percent to $28.96.

Latest Ratings for GE

DateFirmActionFromTo
Sep 2019Initiates Coverage OnEqual-Weight
Jul 2019DowngradesBuyNeutral
Apr 2019DowngradesNeutralUnderweight

View More Analyst Ratings for GE
View the Latest Analyst Ratings

Posted-In: Argus John EadeAnalyst Color Price Target Reiteration Analyst Ratings

 

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