General Electric Co.’s (NYSE:GE) infrastructure division, which provides services in aviation, energy, transportation, water and other industries, is at the epicenter of the global infrastructure boom. This is the view of Goldman Sachs analyst Deane Dray, who says GE Infrastructure is on track to deliver double-digit revenue and operating profit growth in 2007 and 2008.
The division contributes an estimated 35% to GE’s total revenues.
Mr. Dray expects to hear that its businesses remain robust and should continue to drive earnings throughout the latter stage of this economic cycle at GE’s analyst meeting in Ohio on Tuesday.
“Strong international and late-cycle growth remain dominating themes in the face of moderating U.S. growth and weak new housing,” he told clients in a note, where he reiterated his “buy” rating and US$44 price target for GE shares.
This implies potential upside of 9% and is based on GE’s average historical price-to-earnings premium to the S&P 500.
GE is also on Goldman’s Americas Buy List.