The Street may be guilty of overanalyzing General Electric Company 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:
- The company will successfully de-lever itself.
- Earnings should grow at 12% in 2020 and accelerate to 29% growth in 2021.
- 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
Photo credit: Momoneymoproblemz, via Wikimedia Commons
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