Analyst Christopher Glynn of Oppenheimer gave his quarterly update on industrial giant General Electric Company (NYSE:GE). GE’s quarterly earnings report showed Healthcare and Power had solid YoY growth. Power also projected strong second half of the year growth “on timing of power gen shipments that supersede easier 2H comparisons.”
Overall, operating profit is tracking flat for the year compared to the analysts estimate of +2% “subject to potential 2H operating leverage upside at Power, expected moderation at O&G, [Oil and Gas], and restructuring savings realization.” GE is expecting 2H O&G growth to be down 7% compared to 18% in the first half of the year.
GE’s 2Q16 EPS was $0.51, which beat the analyst expectations. Industrial segment profit went down 5%, more than the analyst’s -3% estimate. GE’s Industrial segment had an operating margin of 14.4% and Alstom added $138 million of profit. GEC exit had $181 billion signings on asset sales through the second quarter and $14 billion in buybacks through the first half of the year. GE is also anticipating meaningful declines in Transportation for 2017 with O&G also remaining under pressure. The analyst feels that Aviation and Power, along with Capital plan, are essential to 2017-18 estimates.
Glynn noted, “Our 2017E-’18E estimates are unchanged, with ’16E up $0.03 to $1.53, driven by +$0.04 lower tax rate, +$0.02 lower shares/slightly up GEC, and -$0.03 core industrial. Erratic 2016 quarterly EPS distribution includes roughly $0.02 net restructuring in 3Q (flat y-o-y) and $0.04 net restr. in 4Q (vs. $0.04 net gains LY), with the full year neutral.”
According to TipRanks, the analyst has a yearly average return of 15.2% and a 74% success rate. The analyst has a 16.3% average return when recommending GE, and is ranked #1 out of 4,071 analysts.
TipRanks shows that out of the 14 analysts who rated GE in the last 3 months, 50% gave a Buy rating, 36% gave a Hold rating and 14% gave a Sell rating. The average 12-month price target for the stock is $32.50, marking a 4.67% upside from current levels.