Market Overview

General Electric's Power Business Is Flickering, Company 'Long Way' From Seeing Turnaround

General Electric's Power Business Is Flickering, Company 'Long Way' From Seeing Turnaround

Wall Street is having trouble seeing the light when it comes to a turnaround for General Electric Co. (NYSE: GE)'s weak Power business.

Powering Down

Analysts said GE's Tuesday announcement of more coming financial woes in 2019 was worse than expected and the notion that the Power business is on the verge of amping back up is getting weaker.

GE CEO Larry Culp said at the JPMorgan Aviation, Transportation & Industrials Conference that the industrial giant is expecting negative overall cash flow from the company’s industrial business and that the Power business will need “a couple of years” to recover from its troubles.

Sell-Side Weighs In

JPMorgan’s Stephen Tusa told CNBC his $6 price target on GE now looks generous and that GE’s problems are worse than expected.

Tigress Financial’s Ivan Feinseth said GE is a “long way” from seeing a turnaround.

Bank of America Merrill Lynch analyst Andrew Obin reiterated a Neutral rating on GE's stock and lowered his price target from $13 to $12.

The Theses

"We are no longer willing to engage in a debate where the Bull case is that Power is 'not that bad,'" Tusa told CNBC. "As long as this sentiment prevails, we don't think the stock can bottom. Our [price target] remains $6 and looks generous after [Tuesday's] news."

Feinseth was succinct in his daily newsletter to investors.

“I believe GE is a long way from seeing a turnaround and continue to recommend avoiding the stock,” Feinseth wrote.

Obin was less bearish, though lowering his price target to $12. He thinks GE's stock “appropriately balances solid balance sheet outlook and uncertainty related to path of Power recovery."

After falling 7 percent Tuesday, GE's stock was down another 7.8 percent Wednesday afternoon, trading at $9.12 per share at time of publication.

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Photo credit: Empoor, via Wikimedia Commons

Latest Ratings for GE

Apr 2019DowngradesNeutralUnderweight
Mar 2019MaintainsOverweightOverweight
Feb 2019MaintainsOutperformOutperform

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