Earnings Review: RBC Capital Weighs In on General Electric Company (GE), Danaher Corporation (DHR)

In research reports released Friday, RBC Capital analyst Deane Dray reiterated mixed ratings on industrial giant General Electric Company (NYSE:GE) and medical technology maker Danaher Corporation (NYSE:DHR), as both names released third-quarter earnings reports that failed to impress investors. Let’s take a closer look:

General Electric Company

Dray reiterated an Outperform rating on shares of General Electric, with a price target of $36, after the company released third-quarter results, posting EPS of $0.32 and $29.27 billion in revenue, compared to consensus estimates of $0.32 in EPS and revenue of $29.64 billion. In addition, GE tightened its guidance for the full year. It now expects full-year earnings to be between $1.48 and $1.52 per share, compared to the previous outlook of $1.45 to $1.55 per share.

Dray commented, “The bottom line is that GE is holding up relatively well in a slower-growth macro, in our view. The headline 3c beat vs. our estimates was paced by 1c on the Industrial operating line, 1c better on GE Capital, and 1c contribution from tax. As always, there are puts & takes in the composition of the earnings release today. On balance, we would expect a flattish stock reaction to modest disappointment on the light Industrial revenues that came in -1.3% below our estimate, lowered guidance for organic growth, and commentary about 2018 that does not mention a $2 EPS target, but no one should be surprised that the 2018 bridge is now highlighting oil & gas end market pressures. The key positives were the broadly in-line results across the segment operating earnings (especially given the macro angst), a 22% buyback boost, and cash flow now ahead of the initial 2016 plan.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Deane Dray has a yearly average return of 1.5% and a 57% success rate. Dray has a 2.7% average return when recommending GE, and is ranked #1764 out of 4183 analysts.

Out of the 12 analysts polled by TipRanks (in the past 3 months), 6 rate General Electric stock a Buy, 4 rate the stock a Hold and 2 recommend a Sell. With a return potential of nearly 17%, the stock’s consensus target price stands at $33.56.

Danaher Corporation

In addition, Dray reiterated a Sector Perform rating on shares of Danaher, while slightly raising the price target to $86 (from $85), which represents a potential upside of 8% from where the stock is currently trading.

Dray noted, “Consistent with our preview expectations, Sector Performrated Danaher looks to be a relatively “safe place to hide” heading into year-end. Its first post-Fortive quarter featured a clean beat and raise above consensus. Every segment posted 3% organic growth or better, with exceptional FCF conversion. We believe the shares have more appeal in a risk-off market, and we will be gauging our entry point on this measure.”

Out of the 13 analysts polled by TipRanks, 10 rate Danaher stock a Buy, while 3 rate the stock a Hold. With a return potential of 10%, the stock’s consensus target price stands at $87.91.


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