General Electric Company (GE) Moving in a Smart Direction, But Transformations Take Time

Tigress' Ivan Feinseth spots "little downside" from GE's current trading levels, but is sidelined on short-term challenges, awaiting drivers for shareholder value.


General Electric Company (NYSE:GE) is mid-metamorphosis in pivoting focus to its three best business franchises: aviation, healthcare services, as well as power generation. Though one voice on Wall Street likes the shift, a transformation does not spiral all cylinders firing overnight.

Tigress analyst Ivan Feinseth is surveying the industrial giant from a cautious stance until its Business Performance begins to showcase improvement- or new drivers come forth to bring about “future shareholder value creation.”

As the giant “undergoes a major transformation,” the analyst reiterates a Neutral rating on GE stock without listing a price target. (To watch Feinseth’s track record, click here)

“GE will divest all its other business lines and refocus its capital on creating future shareholder returns. As the restructuring has been announced, and GE will focus on what it believes are its core strengths and strongest future businesses. GE will emphasize adding value to these core business lines through the ongoing integration of new digital capabilities. The dividend is cut, which was viewed as a bold step in the company‚Äôs turnaround. We believe a bottom is in the stock and see little downside from current levels. However, we believe it will take some time for the company to start to generate positive Business Performance trends,” writes Feinseth.

Part of the transformation involves a prioritization of “emphasizing digital based problem-solving solutions within its core business lines,” which GE Aviation already the global frontrunner for providing jet engines for both commercial and military use. The analyst believes with new planes presenting robust demand coupled with a continuous necessity for already existing jet engines to get upgrades, plenty of future growth prospects lie ahead.

In a nutshell, “GE is moving in the right direction,” the analyst wagers, but notes that all the same the giant “still faces many near-term challenges” and “will need to right size balance sheet to generate future shareholder returns.”

TipRanks highlights a Wall Street consensus choosing to play it safe on this industrial giant, with opinion torn between the bulls and the bears. Out of 15 analysts polled by TipRanks in the last 3 months, 3 are bullish on General Electric company, a majority of 8 on the sidelines, and 4 bearish on the stock. With a return potential of 18%, the stock’s consensus target price stands at $21.50.