Market Overview

JPMorgan Says GE's Outlook Is 'Worse Than We Think'

JPMorgan Says GE's Outlook Is 'Worse Than We Think'

Things may soon be going from bad to worse for General Electric Company (NYSE: GE) investors. In a new note to clients on Thursday, JPMorgan reiterated its bearish take on GE stock and said weakness in the company’s financial performance in recent years isn’t necessarily cyclical. Instead, the firm thinks all the optimism about a GE short squeeze or a turnaround story or a return to prior earnings levels is simply a result of denying the reality that GE is no longer the company it once was.

JPMorgan believes GE could fall well below consensus earnings expectations in the second half of the year as part of a potentially painful long-term reset of market expectations.

“To be clear, this is a reset to a lower number off of which future growth is uncertain and realistically below average, different from a ‘kitchen sink’ which implies a base that is unrealistically depressed and can snap back,” JPMorgan wrote.

Related Link: Argus Initiates Baker Hughes At Buy, Sees 32% Upside From Here

The firm said GE bulls hoping that $24 may serve as a base of support could soon be in for a rude awakening. Instead, JPMorgan has a price target of $22 for GE. The firm said $24 may soon be a ceiling, with the high teens representing “investable fair value.”

“With limited potential for a snapback, challenged end market exposures (fossil power/oil & gas), likely still below average FCF conversion (even after the reset), and below average portfolio optionality, including a dividend at risk of cut in a tougher macro environment and funded in the near-term by asset sales, we don’t think GE deserves a premium valuation (i.e., a high multiple on ‘trough EPS’),” JP Morgan concluded.

JPMorgan is now calling for full-year EPS of $1.53 in 2017 and $1.50 in 2018.

Related Link: After Mortgage Crisis, Flagstar Bank CEO Leads A Diversifying Lender

Latest Ratings for GE

Feb 2020Gordon HaskettUpgradesUnderperformHold
Jan 2020B of A SecuritiesUpgradesNeutralBuy
Jan 2020Morgan StanleyUpgradesEqual-WeightOverweight

View More Analyst Ratings for GE
View the Latest Analyst Ratings

Posted-In: JPMorganAnalyst Color Short Ideas Reiteration Top Stories Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (GE)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at