Merrill's Call Should Boost GE

Merrill Lynch reiterates their Buy rating on General Electric (GE) with a price outlook of $37.50.

The firm thinks GE will likely deliver 2Q08 EPS results in-line with the previous guidance of 53-55 cents – this event could present a positive upside trading catalyst for GE’s shares. They believe GE would have pre-announced an earnings shortfall rather than risk even greater investor backlash from reporting a miss the day of the earnings release.

After 2Q08, earnings comparisons start to ease. GE has already materially lowered guidance for the full year and consensus expectations have declined substantially since mid-April. Merrill believes the impact of higher loss provisions, lower securitization gains, and slower real estate markets are part of the company’s previous guidance.

Notablecalls: Ah, lovely. Just what we needed this morning. GE's a buy here for sure. The company already lowered the bar and has traded down significantly since. I'm betting the stock will surpass the $27 level in the short-term.

Calling it actionable.

Comments

[malach hamo...:]

ge is trading to yield 4.7%; even if it takes 2 or 3 quarters to rebound, it's a steal.

2008 Jul 01 08:52 AM

[petpesie:]

No kidding. I'd take a $30 target at this point! $37.50 is a 40% premium to today's price. What I don't understand is why the company doesn't take greater efforts to explain their business model to investors. Their portfolio is beyond complex.

2008 Jul 01 12:09 PM

[Gaucho420:]

I agree completly. The selloff is over-done...been buying a little bit here and there since it went below $30.

2008 Jul 01 12:12 PM

[buyforeclos...:]

The sell off is overdone huh? LOFL. The market is all about oil and oil aint done rising... all stock sell offs have been over done but they keep falling don't they?

2008 Jul 01 12:35 PM

[Dan Jacome:]

volume looked ok today, not enough to get interested....

2008 Jul 01 06:50 PM

[jimsep:]

Wishful thinking! The stock is just beginning to go down relative to others with a heavy finance exposure, which is totally opaque.

GE may or may not make the numbers in the current quarter. Far more important is what they say about the future. A yield of 4.7% won't be enough to hold up the price of the stock.

2008 Jul 02 12:40 PM