J.P Morgan analyst Stephen Tusa believes that General Electric Company (NYSE:GE) is losing steam with a current depression in oil and gas, one setting in transportation, and flattening aviation markets looming.

The analyst believes that Power and Aviation are about to become “battleground sectors.” With approximately 30% of GE’s industrial profits being derived from these sectors, the analyst is concerned. He explains, “ALO is viewed positively, but to meet consensus expectations, the core HDGT/services business here needs to grow well. In this note we summarize the key aspects of our global Power Gen Review published today, what it means for GE Power and the segment model it supports.”

On a macro scale, the analyst explains that centralized fossil power generation is stagnant, with global gas orders at serious risk of peaking. Using McCoy Order data, the analyst sees that 53 GWs were ordered in 2015, marking an in-line year. He continues, “regional share dominated by Middle East/Africa at ~35%, with US at 20% and Asia x-China at 14% and China at ~10%. There are headwinds to growth across the majority of these markets and our market model shows average ~48 GWs in ’16 and further declines from ’17-20.” Beyond this, the analyst affirms that Middle East infrastructure spending is slowing at a concerning rate, with average declines reaching the double digits.

Tusa concluded, “With a depression in oil/gas currently, one setting in at Transportation, and flattening margins at Aviation, Power has emerged as a key business driver for GE. We believe the business will be one of the best relative growers, though we are less bullish than consensus following an in-depth review of global power markets, with micro dynamics that are more fluid than ever, set against a backdrop of no load growth in the core US market, and risk that the large MEA market slows on the decline in petro-dollar related funding sources.”

The analyst reiterates an Underweight rating for GE with a target price of $26, which represents a potential downside of 17% from where the stock is currently trading.

According to TipRank, Tusa is ranked #1,148 of 4,101 analysts. He maintains a success rate of 61% and realizes an average return of 3.4%. When rating GE, the analyst maintains a 50% success rate and realizes an average return of 4.0%.

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