General Electric Company
GENERAL ELECTRIC
+2.07%
closure:0
opening:61.08
High:64.53
low:61.05
cycle:—
Page Quote News Graphs Company Profile Recommendations
More articles on the subject:
Has undergone many incarnations throughout its long history since its founding in 1879. The company, which was one of the original companies in the Dow Jones index (but is no longer included in it), now defines itself as an “industrial high-tech company” operating in four segments: power (gas , Steam turbines and more), renewable energy, aviation (aircraft engines and more) and health.
Expectations on Wall Street from the industrial sector are not particularly high, and stocks have experienced price declines in parallel with the general declines in the markets. Shares of General Electric itself have fallen by about 33% since the beginning of the year compared to a decline of only 14% in the index in industrial shares of the Dow Jones. The company is expected to split its business in the coming years, so the results for the coming quarters are especially important to investors. According to the company’s plan, the health division will be split in 2023, while the rest of the sectors will be split into three separate companies in 2024. The split costs are estimated at $ 2 billion.
During the first quarter, the company earned 24 cents per share, while profitability fell by almost 4% from the corresponding quarter. Losses in the renewable energy sector have deepened relative to the previous quarter. The company expects earnings of 38 cents a share for the current quarter and $ 2.81 for the year. That means in the first half of the year the company needs to earn $ 2.19, almost four times what it earned in the first half to meet expectations.
Aside from a net profit of $ 6 to $ 7 billion that the company expected for 2022 with the release of first quarter results in March this year, the company also expects a free cash flow (FCF) of $ 5.5 to $ 6.5 billion. Assuming the company achieves the low results, 5.5 billion, this is a free cash multiplier of 12.7 which is considered quite low.
Joshua Pokerzoyvinsky, Morgan Stanley analyst, thinks it’s not time to open a stock, despite recent declines. In the analyst’s opinion the forecast presented by the company is unrealistic, although traditionally the fourth quarter is the best of GE. In his opinion, the profit in the second half will amount to only $ 2.06, so he lowered the target price of the stock from $ 100 to $ 95 per share.
Investors will pay attention to the results of the quarter but also to the question of whether General Electric will maintain or lower its forecasts, as quite a few companies have already done. The company has already told investors that “we are moving towards the low range of forecasts”. The reasons for the weak first quarter results are still here, including the war in Ukraine that went nowhere even if it dropped slightly from the headlines, the corona restrictions in China and the difficulties of global supply chains, so lowering the forecast is a very likely scenario.
Gai Morgan analyst Stefan Tosa also recently lowered the stock’s target price from $ 55 to $ 50, writing that the company’s expectations for 2023 are too high, and Julian Mitchell of Barclays also lowered the target price from $ 96 to $ 81. dollar.
Despite the drop in target prices, Morgan Stanley and Barclays are still recommending a buy recommendation for the stock, which is currently trading at $ 64.12, up 3.6% today. Tosa recommends the stock in hold only. The company is currently traded at a value of $ 71 billion. According to the Yahoo Finance website, analysts are very divided about the company, with 7 of them recommending the company as a strong buy or buy. 6 hold the recommendation of the hold, 3 have a lack of performance and one analyst recommends selling the company.
Comments on the article(0):
Your response has been received and will be published subject to system policies.
Thanks.
For a new response
Your response was not sent due to a communication problem, please try again.
Return to comment