What Made Oppenheimer Upgrade General Electric’s Stock?

By Ryan Adsit

General Electric (GEResearch Report) received a Hold rating from Oppenheimer analyst Christopher Glynn yesterday. The company’s shares closed yesterday at $10.16.

Glynn said:

“With seemingly stabilized GEC book value, weak earnings were an after-thought, especially since softness supplied primarily from Power (Renewables OP also remains challenged). Adjusted ’18 Industrial FCF was $4.5B, with 2019 expected lower (progress collections helped 2018 more, Alstom backlog work-down, higher cash restructuring vs. $2B ’18, and dispositions). Guidance metrics were sparse, pending timing for GE teams to establish their own handles on Power issues (weak markets, various execution and backlog-related reserves and other charges), but established view of l-msd organic growth and OM expansion. GE net debt (excluding GEC) of $55B reflects ~4.3x EBITDA (~3.4x before restructuring), with 2.5x targeted over next few years (via separations of Healthcare, Transp., BHGE, net of GEC support and liquidity preferences).”

According to TipRanks.com, Glynn is a 5-star analyst with an average return of 6.6% and a 59.2% success rate. Glynn covers the Industrial Goods sector, focusing on stocks such as Emerson Electric Company, Honeywell International, and Eaton Corporation.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for General Electric with a $10.56 average price target, implying a 3.9% upside from current levels. In a report issued on January 16, Merrill Lynch also reiterated a Hold rating on the stock with a $11 price target.

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Based on General Electric’s latest earnings release for the quarter ending September 30, the company reported a quarterly revenue of $29.57 billion and GAAP net loss of $22.77 billion. In comparison, last year the company earned revenue of $32.39 billion and had a GAAP net loss of $9.86 billion.

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General Electric Co. is a technology and financial services company that develops and manufactures products for the generation, transmission, distribution, control and utilization of electricity. Its products and services include aircraft engines, power generation, water processing, security technology, medical imaging, business and consumer financing, media content and industrial products. The company operates through the following segments: Power, Oil & Gas, Aviation, Healthcare, Transportation, Appliances & Lighting and GE Capital. The Power segment serves power generation, industrial, government and other customers worldwide with products and services related to energy production. The Oil & Gas segment supplies mission critical equipment for the global oil and gas industry, used in applications spanning the entire value chain from drilling and completion through production, liquefied natural gas and pipeline compression, pipeline inspection, and downstream processing in refineries and petrochemical plants. The Aviation segment products and services include jet engines, aerospace systems and equipment, replacement parts and repair and maintenance services for all categories of commercial aircraft; for a wide variety of military aircraft, including fighters, bombers, tankers and helicopters; for marine applications; and for executive and regional aircraft. The Healthcare segment products include diagnostic imaging systems such as magnetic resonance, computed tomography and positron emission Tomography scanners, X-ray, nuclear imaging, digital mammography and molecular imaging technologies. The Transportation segment engages in global technology and supplier to the railroad, mining, marine and drilling industries. The Appliances & Lighting segment products include major appliances and related services for products such as refrigerators, freezers, electric and gas ranges, cooktops, dishwashers, clothes washers and dryers, microwave ovens, room air conditioners, residential water systems for filtration, softening and heating, and hybrid water heaters. The GE Capital segment offers financial services and products worldwide for businesses of all sizes, services include commercial loans and leases, fleet management, financial programs, credit cards, personal loans and other financial services. The company was founded by Thomas A. Edison in 1878 and is headquartered in Boston, MA.