Yesterday, 7:47 PM
- GE shares slumped another 1.3% in today's trade to their lowest levels this month after J.P. Morgan issued a bearish note warning that GE's Q3 is trending well below initial estimates ahead of a big Q4 that historically has missed expectations.
- "As the hysteria around transformation fades, and the focus shifts to actual numbers, what's left is a core, fundamental outlook for earnings and free cash flow that we think is at best stable, at worst deteriorating, and undoubtedly below consensus," J.P. Morgan analysts write.
- The firm is concerned that its $2.00 EPS target for GE in 2018 was based on organic growth that may have been too ambitious, and it lowers its 2018 EPS target to just $1.75.
- "This profile, including high expectations which are now too high and worst-in-class [free cash flow] is neither safe nor deserved of a high multiple," the firm says, adding that it rates GE at Underweight with a Street-low $26 price target.
Sat, Jul. 23, 8:25 AM
- General Electric (NYSE:GE) was yesterday's biggest laggard among Dow stocks, sinking 1.6% after reporting a 2% drop in orders for Q2, with industrial orders - GE’s jet engines, power turbines, oil production equipment, et. al. - plunging 16% amid weakness in oil and gas prices that hurt demand.
- "The texture of this quarter is very similar to the two most recent quarters, with exceptionally weak orders,” says Morgan Stanley's Nigel Coe, who rates GE at Equal Weight with a $32 price target.
- GE's total Q2 revenues rose 15% Y/Y to $33.5B, but organic industrial sales excluding the Alstom acquisition fell 1%; GE needs to meet its own expectations for a substantial upturn in organic trends in H2 in an "extremely challenging" environment, Coe says.
- "Those are capital intensive purchases and if those get pushed out even just a little bit" it could weaken GE's performance, says Edward Jones analyst Jeff Windau.
- Andrew Elofson at Davidson Investment Advisors takes the long view, seeing Q2 as "a speed bump on the path to their transformation” and not really looking at whether GE can hit its 5% organic sales growth target for H2.
- But Standpoint Research’s Ronnie Moas responded to the Q2 results by slapping a Sell rating on GE with a $26 price target, seeing no reason to own the shares that trade at more than 20x 2016 EPS estimates while "dozens" of mid-cap names with room to grow trade at or below 10x earnings - such as YRCW, TGI, AVH, GBX, ARII, CBI, UAL, SPR and ACM.
Fri, Jul. 22, 7:48 AM
- GE reported earnings growth of $0.52 (+65% Y/Y) and revenue of $33.5B (+15% Y/Y) for Q2, but shares fell 1.8% in premarket action due to a 2% decrease in orders and "a volatile and slow-growth economy."
- The company said its power, aviation and health-care segments offset challenges in transportation and in oil and gas, but it expects to see strong organic growth in the second half of the year.
- "We will continue to invest in key growth initiatives such as GE Digital, while returning [about] $26B to investors through buyback and dividends," CEO Jeff Immelt declared.
- GE Capital's exit plan has enabled it to return $15B in dividends year to date, and the company’s de-designation as a SIFI will give it more balance sheet flexibility.
- Q2 results
Fri, Jul. 22, 6:32 AM
Thu, Jul. 21, 5:30 PM
Wed, Jul. 20, 9:05 AM
- As part of a drive to promote its "industrial internet" business in China, General Electric (NYSE:GE) is partnering with Huawei Technologies to develop productivity-enhancing "smart machines."
- The industrial giant announced the partnership as it launched an $11M digital facility in Shanghai, where it plans to have developers work on new software applications that make machines more intelligent.
Fri, Jul. 15, 10:18 AM
- BMO technical analyst Russ Visch likes the following stocks:
- MMM: breaks out of 2-yr range, new target $205.
- AYI: successfully tested breakout at $241 level, next target $313.
- CAT: “lots of positive developments” including beginnings of a bearish-to-bullish reversal; rally above $81 would signal uptrend resuming with target of $105.
- EMR: successful retest of recent breakout, rally above $56.75 would open new target of $65.50.
- GE: breaks out of triangle pattern, next target $37, implies nearly 15% gain.
- TYC: has to breakout above $44 resistance, that would open new target of $48.
- UNP: in bearish-to-bullish reversal, new long-term uptrend underway, next target $113, implies 23% gain.
- UPS: to challenge all-time high at $114.40, breakout would be “extremely bullish” with new target $140.
- Also likes: FAST, FLR, JEC, MAS, PH, UTX, VRSK
Thu, Jul. 14, 9:22 AM
- Aircraft engine maker CFM International, jointly owned by General Electric (NYSE:GE) and Safran (OTCPK:SAFRY), won new deals worth $8.2B at the Farnborough Airshow.
- They include orders, commitments and long-term service agreements for a total of 565 engines from airlines including AirAsia, Air Europa and TAP Portugal.
Wed, Jul. 13, 10:44 AM
- General Electric's (GE +0.3%) healthcare unit aims to build a $1B business offering vital manufacturing tools for a coming wave of cell therapies, helped by the acquisition of Switzerland's Biosafe Group, which will double its presence in the field.
- Using cells to fight cancer is a long way from GE's better-known areas like power generation and aviation, but the head of the industrial giant's $18B/year healthcare operation sees a big, high-margin opportunity.
- "We want to double down on life sciences, and especially so in the cell therapy business," John Flannery said in an interview.
Tue, Jul. 12, 12:30 PM| Tue, Jul. 12, 12:30 PM | 12 Comments
Mon, Jul. 11, 2:26 PM
- General Electric (GE +0.8%) rallies to its highest level in eight years after announcing that its Predix industrial operating system will be available on Microsoft's Azure cloud, but the company's sustained upward march has been a long time coming.
- Josh Brown of Ritholtz Wealth Management thinks GE's upward momentum will continue, thanks to underappreciated fundamentals as the company has "gotten rid of the bad stuff [and] has doubled down on the good stuff... aerospace, the Internet of things, health care [and] robotics and automation. Those are four of the most important secular bull markets over the next 5-10 years."
- Brown sees GE's balance sheet as flexible enough "to buy back more stock, raise their dividends and even do acquisitions... there aren't any flies on this story."
- Citigroup analysts see “another sloppy quarter” overall for industrial stocks but considers GE a top pick, with the potential for GE’s service business to grow by 9% Y/Y from 7%, a key driver because service represents close to 80% of GE's profits, which means the company’s growth visibility could be better than investors believe.
Mon, Jul. 11, 10:12 AM
- General Electric (GE +0.6%) and Microsoft (MSFT +0.6%) have announced a partnership that will make GE's Predix platform for the Industrial Internet available on the Microsoft Azure cloud for industrial businesses.
- The move isn't entirely new for GE (Predix was already available on Amazon and Oracle's clouds), but it's an important step for Microsoft, which wants to establish itself as the favored partner for big business.
Fri, Jul. 8, 11:46 AM
- GE (GE +1.1%), oil drillers and regulators are scrambling to determine why massive bolts used to connect subsea oil equipment keep failing, causing alarm over the safety of hundreds of wells in the Gulf of Mexico, Dow Jones reports.
- A U.S. investigation and two recent bolt failures have convinced regulators and industry officials that the problem goes beyond GE and its blowout preventers, according to the report; the Interior Department says flaws also have been found in bolts made by National Oilwell Varco (NOV +2.5%) and Schlumberger (SLB +1.3%), and in bolts used in other areas on subsea wells.
- GE says it is working with the Interior Department to address the problems and has supplied replacement parts to customers upon request.
- Companies already have begun the process of finding and replacing corroded bolts; Diamond Offshore (DO +1.9%), which has a fleet of 30 rigs, told investors in June that it had four unplanned “stack pulls” in Q2 with three of the repairs involving failed bolts, interruptions that likely will impact Q2 results.
Thu, Jul. 7, 3:18 PM
- The unnamed "smartest man" is one who analyst Scott Davis believes is "the most thoughtful industrial investor."
- Citing high and rising dividend yields, good cash flow, solid balance sheets, ability to hold/expand margins with cost cuts, this investor thinks industrials (NYSEARCA:XLI) like GE and Honeywell (NYSE:HON) could be part of a modern day "nifty fifty."
- This attitude is particularly noteworthy given Davis' last report from the "smartest man" had him selling GE to buy high-beta names.
Thu, Jul. 7, 7:56 AM
- National Oilwell Varco (NYSE:NOV) and GE Oil & Gas (NYSE:GE) announce plans to cooperate on providing integrated solutions for floating production storage and offloading vessels in an effort to drive down the cost of deepwater oilfield projects.
- NOV and GE say their combined efforts will provide industry-leading topside systems with repeatable deliveries, scale economies and standardized interfaces, which should reduce risk of construction delays and cost overruns for deepwater oil and gas customers.
- The companies expect to complete joint engineering efforts and begin offering topside package solutions to oil and gas industry by early 2017.
Fri, Jul. 1, 8:47 AM
- This week's decision by the Financial Stability Oversight Council to de-designate GE Capital as a SIFI could accelerate further erosion of General Electric's credit profile.
- "The decreased regulatory oversight now allows the company to reduce capital ratios at its finance subsidiary so that more cash can be returned to the parent, which GE plans to do," said Russell Solomon, SVP and lead analyst at Moody's.
- Separately, the company has announced the completion of GE Asset Management's sale to State Street (NYSE:STT).
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... More
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