As the peak of earnings season continues, analysts are weighing in on industrial giants General Electric Company (NYSE:GE) and Caterpillar Inc. (NYSE:CAT) with neutral ratings and views.
General Electric Company
Oppenheimer’s top analyst Christopher Glynn reiterated a Perform rating on shares of General Electric, after the company reported a slight decrease in its 1Q16 core quarterly profit, citing weak sales of oil and gas drilling equipment.
Glynn wrote, “O&G pressures arrived late for GE after a relatively benign 2015, though overall guidance was unchanged at 2-4% organic, suggesting 5% 2H organic revenue growth, led by timing of major equipment shipments at Power, and complemented by solidifying trends at Healthcare and easier O&G comparisons. 2016 remains a heavy year for execution, with 2017 expected much more favorable for new gas and wind turbine cost positions, and for Alstom synergies, as well as lack of divestitures.”
“Our 2016E-’18E estimates are unchanged, with ’16E of $1.50 at midpoint of $1.45-1.55 guidance range. Erratic 2016 quarterly EPS distribution includes roughly $0.09 net gains in 2Q, with the full year neutral,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Christopher Glynn has a yearly average return of 15.7% and a 74% success rate. Glynn has a 16.3% average return when recommending GE, and is ranked #1 out of 3906 analysts. See Glynn’s stock picks here.
Out of the 14 analysts polled by TipRanks, 9 rate General Electric stock a Buy, while 5 rate the stock a Hold. With a return potential of 9%, the stock’s consensus target price stands at $33.62.
Merrill Lynch analyst Ross Gilardi reiterated a Neutral rating on shares of Caterpillar, with a price target of $81, after the company released its first-quarter earnings that fell short of expectations and lowered its midpoint 2016 revenue outlook.
Gilardi actually sees some signs of hope, noting, “In our view, there are some tentative signs that we are nearing a bottom – iron ore price hitting a 52-week high, miners are missing production targets, China trends are improving (for now), and the USD is weakening. While CAT is not seeing these signs translate into a pick-up in equipment demand, we believe there are some subtle positives: 1) Backlog stabilized QoQ ($13.1bn vs $13bn Q415), 2) CAT raised its production schedule in China for the first time in a while, driven by higher construction activity. CAT does not believe the pick-up is emissions-related, and 3) SOLAR backlog was slightly up QoQ. While the oil portion is down YoY, the gas-related business remains stable, despite concerns on midstream capex.”
However, “We believe there are still hurdles for CAT to deliver its FY guide, and we lower our 2016- 17 EPS estimates, accordingly. Pricing pressure is intensifying. In our view, it is somewhat discouraging that pricing is a notable drag in NA construction, despite a healthy non-residential backdrop.”
According to TipRanks.com, analyst Ross Gilardi has a yearly average return of -2.2% and a 44% success rate. Gilardi has a 13% average return when recommending CAT, and is ranked #2912 out of 3906 analysts.
Out of the 13 analysts polled by TipRanks, 2 are bullish on Caterpillar stock, 9 remain sidelined, and 2 are bearish. With a downside potential of 10%, the stock’s consensus target price stands at $69.15.