Double-dip: GE buys Cameron unit, Citi removes from Focus List

|By:, SA News Editor

Investors didn't seem too thrilled with GE's $550M purchase yesterday of Cameron's (CAM) reciprocating compression division, sending GE shares more than 1% lower today.

For CAM, Sterne Agee views the asset sale (and likely additional sales) as positive but believes execution of its core businesses will be the key to success in 2014; while asset sales could prompt some modest downside to its 2014-15 EPS estimates of $3.90 and $5.00, the firm sees CAM's aggressive approach to buying back stock in Q4 indicating confidence in its operations and execution.

Citigroup removes GE from its Focus List, not because of the purchase but due to its earnings: GE unexpectedly fell 10 bps short of its 2013 target of 70 bps of operating margin growth, normally not a big deal "but since GE does not provide EPS guidance, this target had become a disproportionally key 2013 milestone in GE’s road to a transformational mix of 70/30 industrial/capital."