Market Overview

Citi: General Electric's Recovery 'Could Be More Significant' Than Investors Realize

Citi: General Electric's Recovery 'Could Be More Significant' Than Investors Realize

General Electric Company (NYSE: GE) shares traded higher by another 4.5% on Wednesday after yet another analyst had good things to say about the stock.

Citi analyst Andrew Kaplowitz reiterated his Buy rating for GE.

The Thesis

After meeting with General Electric CEO Larry Culp, Kaplowitz said he is more optimistic about GE’s turnaround efforts. While GE is far from out of the woods just yet, Kaplowitz said the company’s near-term goals of +/- $1 billion in free cash flow and EPS of between 55 cents and 65 cents in 2019 is achievable.

Kaplowitz said the company’s top priority remains derisking its balance sheet and simplifying its business. Despite concerns over the ongoing U.S. trade war with China, he said investors may be underappreciating how much progress GE is making toward these goals.

“Longer-term, GE’s runway for improving results in 2020 and beyond could be more significant than we think some investors appreciate given what appears to be an increasing focus on fundamental changes to operational and management practices that could drive better and more consistent results over time,” Kaplowitz wrote in a note.

Other GE Headlines

Kaplowitz’s comments come after analysts from Deutsche Bank and Wolfe Research dismissed accusations by Bernie Madoff whistleblower Harry Markopolos that GE has used misleading accounting to deceive investors about its cash balance and insurance reserves. Analysts from both firms said Markopolos’ report fails to make a compelling case for fraud.

In addition, Danaher Corporation (NYSE: DHR) announced on Tuesday it has priced a €6.25 billion senior notes offering to fund the acquisition of GE’s BioPharma Business.

Gordon Haskett analyst John Inch told Benzinga on Wednesday the Danaher news should not be a bullish catalyst for GE stock.

“GE seems to pop on any headline – that isn’t a healthy trading pattern. The deal was never in question, in my opinion – Danaher is buying BioPharma for a below-market valuation,” Inch said.

Benzinga’s Take

Dismissing the fraud accusations removes one potential overhang for GE stock, and the Danaher news is certainly a positive. Management optimism is also comforting for concerned investors after so many guidance cuts and earnings misses, but at some point GE will need to demonstrate real traction toward long-term earnings and cash flow growth.

Do you agree with this take? Email with your thoughts.

Related Links:

Mixed GE Options Trades Suggest The Rally May Soon Run Out Of Steam

Analyst: Regulatory Response To GE Allegations Is Reassuring For Investors

Photo credit: Bubba73, via Wikimedia Commons

Latest Ratings for GE

Dec 2020DZ BankUpgradesSellHold
Dec 2020Morgan StanleyMaintainsOverweight
Dec 2020B of A SecuritiesMaintainsBuy

View More Analyst Ratings for GE
View the Latest Analyst Ratings


Related Articles (GE)

View Comments and Join the Discussion!

Posted-In: Andrew Kaplowitz CitiAnalyst Color News Reiteration Asset Sales Top Stories Analyst Ratings Best of Benzinga

Latest Ratings

TSLAJP MorganMaintains125.0
INTCTruist SecuritiesMaintains64.0
FBTruist SecuritiesMaintains320.0
AAPLCowen & Co.Maintains153.0
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.
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