Shares of General Electric Co. rose to a nearly two-year high on Monday after JPMorgan’s Stephen Tusa, a longtime skeptical analyst, assigned coverage to two colleagues who immediately raised price targets to 76%.
Analysts Seth Seifman and Mark Strauss assume combined coverage of GE and reiterate the neutral rating they’ve held on the stock for the past three years. But Seifman and Strauss raised the stock-price target from $50 to $88, which is slightly above current levels. The previous target was about 43% downside from current levels.
0.8% to $87.06, taking it to its highest level since June 4, 2021.
It is up 31.3% in the past three months and is up 82.6% since it closed at a 20-month low of $47.67 on July 14, 2022. S&P 500 SPX,
Has increased by 6.8% since July 14.
GE is in the process of being split from an industrial and financial conglomerate into three separate companies. GE Healthcare Technologies Inc. GEHC,
was spun off from GE in January, while GE Verona, which combines GE’s renewable and power businesses, will be spun off in early 2024, leaving GE to operate as GE Aerospace.
“During this transition, GE has substantially reduced debt and other liabilities and while there is still work to be done, the outlook is easy to understand,” Siefman and Strauss wrote in a note to clients.
While he sees “an excellent business” in GE Aerospace and “potential” in GE Verona, he believes the stock has “limited upside” in light of its strong rally in recent months.
“Of the two remaining companies, aerospace contributes the bulk of today’s value and we view the commercial engines business as a marquee franchise,” the analysts wrote. “GE Verona … is in the midst of a transformation that could yield a meaningful earnings ramp with direct linkages to the Energy Transition and Inflation Reduction Act (IRA), although this needs to be proven.”
GE’s stock may now get a boost with Siefman and Strauss covering the company, as Tusa was known to be the first person on Wall Street to call GE on its liquidity and growth issues. While he retracted his bearish stance in March 2020, his stock-price target of $50 was the lowest of 22 analysts surveyed by FactSet prior to assigning coverage.
Since Tusa upgraded GE to neutral three years ago, the stock has climbed 28.2%, while the Industrial Select Sector SPDR Exchange-Traded Fund XLI,
is up 40.2% and the S&P 500 is up 34.8%.
Credit: www.marketwatch.com /