The stock (GE) is rising on Thursday as investors continue to digest their earnings report from the start of the week. Barclays remains bullish and did not have to adjust any of his estimates – a victory in itself.
The Back Story . GE's shares have risen 40% since the beginning of the year, though they have fallen by almost 25% in the last 12 months. The most recent issue in the history of the industrial company was the result of the first quarter on Tuesday, which exceeded the analysts' expectations, though it was perhaps more remarkable for other reasons. Analysts' opinions are very mixed with GE, a fact that the report has changed little since most of Wall Street merely reaffirmed their past post-news stance.
What's new? On Thursday, analyst Barclays Julian Mitchell reiterated an overweight and a target price of $ 13 for the shares. He wrote that he left his model largely unchanged after Tuesday's results. The non-action was a welcome relief "after a series of seemingly eternal subsidence, every time GE reports this." Mitchell's price target implies a 27% increase in the current price.
The company's outlook for the company's free cash flow appears to be intact, with this metric eventually becoming positive in the fourth quarter, totaling $ 1.6 billion. "It was heartening to hear that the bid for a double-digit FCF margin is being repeated."
While the company's Renewable segment may be disappointed, Mitchell writes that the company's projected revenue increase is at least "very visible." The rest of the year and the "forecast that Power 2019 will be profitable was positive." Margin increased in the first quarter and reasonable revenue trends. If Power is profitable in 2019, investors may begin to give the impression that there are not always large FCF outflows. "It is also a relief that" at GE Capital no additional shoes have fallen, "he writes.
Forward-looking . Applying multiples applied by peers to GE's individual units means for Mitchell an estimate of the fair value of $ 14, a dollar above its price target, and about 36% of where the stock trades today.
As Barrons noted earlier this week, it may still be too early to explain GE's turnaround, but with the stock's big rally in 2019, the bulls are also moving forward.
GE rose 1.4% to $ 10.24 in the last trade.
Write to Teresa Rivas at [email protected]