Why Goldman Analysts Deserve Praise For 'Refreshing' GE Call

Goldman Sachs recently modeled upside potential of 50% for General Electric Company GE and this is a "great call" for the struggling stock, Gradient Investment's Michael Binger said Monday morning on CNBC's "Trading Nation."

'Looking Forward': Goldman Sachs' call is "refreshing" because it stands out as "looking forward" at a time when other analysts continue looking backward, Binger said. The analyst's forward-looking model is based on four factors: an economic rebound in 2021, a shift from negative cash flow to positive cash flow within three years, a rebound in the airline jet engine division, and an underappreciated power and renewable energy story.

"I tend to agree with these calls," Binger said. "I think next year as we exit 2021 is going to look a lot different than where we're at right now."

See Also: 'Halftime Report' Traders Weigh In On Goldman's General Electric Call

Cautious On The Stock: GE's stock has lost more than half of its value from its 52-week high of $13.26, so a 50% upside from current levels is not "much of a stretch at all," according to Piper Sandler's Craig Johnson. But investors may want to take a cautious approach moving forward

The stock continues to trade below a declining 40-week moving average and this "suggests that we're in a bit of a decline," he said. If the stock breaks above around $7.15, this could change the narrative and there is a "good shot" it can "work its way up" towards $10.

"But at this point in time, I'm going to take a little bit of a wait-and-see approach to see if we can get that breakout," Johnson said. "And with earnings coming here in a few weeks, I'll wait for that earnings print to come out before I start stepping into this stock right now."

GE traded around $6.80 at publication time.

Photo via Wikimedia

Posted In: CNBCMichael BingerTrading NationAnalyst ColorTechnicalsTop StoriesAnalyst RatingsMediaTrading Ideas