Analysts Speak Up On GE's Solid Quarter

Analysts Speak Up On GE's Solid Quarter

General Electric Co GE shares closed nearly flat in a volatile session on Wednesday after the struggling industrial giant reported an encouraging quarter. GE beat consensus earnings and revenue expectations and raised its 2019 industrial free cash flow guidance to a new range of between negative $1 billion and positive $1 billion.

CEO Larry Culp also said GE is seeing “improvements” in its Power business, which he said is in “serious turnaround mode.” GE also announced the departure of CFO Jamie Miller, who had been with the company since 2008 and was the last remaining executive of the former management team under departed CEO John Flannery.

Several Wall Street analysts and experts have weighed in on GE stock following the report. Here’s a sampling of what they had to say.

Incremental Improvements

CFRA analyst Jim Corridore said the 25% decline in Power revenue was expected, but noted that Aviation and Healthcare revenues were down as well.

“GE's turnaround is slowly progressing and we believe the company has a good plan in place to turn around power and focus on renewables, aviation and healthcare,” Corridore wrote in a note.

Credit Suisse analyst John Walsh said GE investors should still be taking a quarter-by-quarter approach.

“Overall, we thought the quarter was fine. Industrial profit missed by a penny, but FCF came in towards the higher end of the guide (but still negative),” Walsh wrote.

Challenges Ahead

Gordon Haskett analyst John Inch said GE investors need to watch out for Boeing Co BA potentially cutting prices on the single-aisle 737 MAX, which could also hurt GE’s bottom line.

“You could have emerging issues in the long-term aviation story that everyone presumes is rock solid,” he said.

Katie Stockton, founder of Fairlead Strategies, told CNBC that, despite a 36.8% year-to-date gain, GE has yet to generate a convincing bullish long-term technical breakout.

“The resistance level that I’m watching is about $10.70 so a breakout that’s confirmed, meaning you spend a couple of weeks above that level, would really solidify a turnaround for GE in my eyes which has really just been range-bound and somewhat neutral in terms of momentum,” Stockton said.

Ratings And Price Targets

  • CFRA has a Buy rating and $12 target.
  • Credit Suisse has a Neutral rating and $11 target.
  • Gordon Haskett has an Underperform rating and $7 target.

GE's stock traded around $10.36 per share at time of publication.

Related Links:

How GE Investors Could Benefit From The Boeing Groundings

JPMorgan Downgrades GE, Says Street 'Significantly Over Projecting' Cash Flow

Photo credit: Momoneymoproblemz, via Wikimedia Commons

Posted In: CFRACredit SuisseFairlead StrategiesGordon HaskettJim CorridoreJohn InchJohn WalshKatie StocktonAnalyst ColorEarningsNewsPrice TargetTop StoriesAnalyst Ratings