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GE should cut dividend after weak Q3 results, analysts say

Oct. 20, 2017 12:39 PM ETGeneral Electric Company (GE) StockGEBy: Carl Surran, SA News Editor49 Comments
  • General Electric’s (GE -1.1%) weak Q3 results and substantial cut to earnings expectations (I, II) indicate the "correct action" would be lowering the dividend, says Morgan Stanley analyst Nigel Coe.
  • Deutsche Bank's John Inch says GE "falls well short" of generating enough cash to pay its $8B common dividend from operations, which suggests that a "sizable dividend cut is pending," and the stock at 22x P/E now looks "that much more expensive"; the firm rates GE a Sell rating with a $21 price target.
  • A dividend cut is increasingly likely, and weak results look to continue in Q4 with ongoing challenges in GE's power and oil and gas divisions, says Stifel's Robert McCarthy.
  • Melius Research's Scott Davis reiterates a Buy rating and $35 price target on the stock, but says he is "downright angry at retired CEO Jeff Immelt and the GE Board. They bled this company and harmed its brand over 16 years. If it’s even remotely true that Immelt had a spare airplane following him around 'just in case,' [it] should be investigated as corporate theft with remuneration made back to shareholders. Let’s hope it’s not."

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