UBS Upgrades GE: Analyzing The Company 'Is Not Trivial'

The Street may be guilty of overanalyzing General Electric Company (NYSE:GE) but in reality it requires a "detailed segment level analysis," according to UBS.

The Analyst

UBS analyst Markus Mittermaier upgraded GE's stock from Neutral to Buy with a price target lifted from $11.50 to $14.

The Thesis

Mittermair said analyzing GE's stock "is not trivial" and a deep dive into the entire business yields three conclusions to support a bullish stance on the stock:

1. The company will successfully de-lever itself.
2. Earnings should grow at 12% in 2020 and accelerate to 29% growth in 2021.
3. Industrial free cash flow will triple in size to $2.3 billion due to strong performance in the aviation and healthcare units.

Once the thesis plays out, the company's reputation should improve from a "significant cash drag" to "successful transformation," CNBC quoted the analyst as saying. As such, the stock is at a "positive inflection point" into next year.

Beyond 2020, GE's stock should rise to $17 per share in the following year based on assigning a comparable valuation to GE's stock relative to other industrial conglomerates.

Price Action

GE's stock traded higher by 3.6% to $11.36 per share at time of publication.

Related Links:

Analyst Updates 2020 GE Healthcare Projections Following Investor Day Event

Morgan Stanley Remains Steady On GE After Earnings Call

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