The stock (GE) closed 2.8% higher on Thursday, even after the company announced to investors that it would earn less this year than last year.
This may be an engaging reaction, but GE shareholders are now used to such things. GE's share has been making a wild ride lately, even though its shares have risen 42% since the start of the year. The
Dow Jones Industrial Average
In contrast, it has increased by 10.2%.
Thursday's stock price reaction shows that investors are not worried about profit. Only one thing is important to them: Progressive boss Larry Culp puts an end to the American industrial icon. On Wall Street, there is no doubt that Culp can or can deliver. Analysts' target prices range between $ 6 and $ 18 per share.
After GE published profit forecasts, specifying assumptions about its insurance portfolio and setting out the challenges in its power department Barrons decided to review Street's statements.
by Melius by Scott Davis rates GE's stock with a target price of $ 18. He was not impressed by the forecast for 2019, which he described as "low quality". The number of GE managers GE offered for 2019 excluded the restructuring and social costs (around 45 cents). The core of Davis's bullish argumentation seems to be a bet on Culp. "We like the likelihood that Larry will fix the core operations within two years," he writes.
Gordon Haskett John Inch rated GE's stock with a target price of $ 7 underperforming. GE's cash flow forecast for 2019 was in line with what Inch had expected, but he is not yet ready to assume cash flow improvements in 2020 or 2021. Inch also points out that GE engines are for the
(BA) 737 MAX Jets, so the situation of Boeing is observed. If production is stopped for a certain period of time, this could temporarily affect aviation cash flow.
John Walsh of Credit Suisse has a neutral rating of GE's stock and a price of $ 11. (Investors should be aware that there are really only two ratings: buy and sell.) Walsh argues that GE's forecast for this year's $ 1 billion industrial cash burn is indeed a good one , It just shows how difficult it is to predict the reaction of a stock to an event. You need to know what a company is likely to say and what investors consider a company. It's a parlay bet.
Barrons believes that GE has entered the next phase of its turn. Culp said on Thursday that 2019 "will be more than what we say." We agree. He has already done the work of yeoman, which has restored some of the credibility that GE had lost after falling by 45% and 57% in 2017 and 2018, respectively. Now investors want the company to make the guidelines and improve in the power sector.
Write to Al Root at [email protected]