General Electric Company (GE) Stock: The Underperformance Doesn’t Stop Here

General Electric Company (NYSE:GE) is like that driver motoring down the highway with the ever-blinking turn signal. Those following along behind are left wondering if that turn will ever come.

J.P. Morgan’s Stephen Tusa clearly doesn’t see any turnaround in GE stock. In a research note issued today, the analyst reiterated an Underperform rating on GE stock, while reducing the price target to $14 (from $16), which reflects a potential downside of 6% from current levels. (To watch Tusa’s track record, click here)

Tusa wrote, “With underperformance continuing, fundamentals challenged/mixed, and showing few signs of a snap back, combined with the revelation around GECS and its cash hole, we see an expedited evolution of outcomes at GE, highlighted by management’s commentary that they are evaluating “portfolio structure”. It’s possible that the company will stay in its current form and grind it out, and in this case there is no change to our fundamental view, though recent moves in the bonds, and a growing realization that, even if cash improves, the balance sheet does not lend much optionality for future growth we believe brings more urgency to the situation.”

“In end, the value that is left over for equity holders is below where the stock currently trades, and we are reducing our PT to $14 to reflect a combination of steady state fundamentals (fundamentally, our prior PT was $16), but with now more weighting on the SOTP value which is $13, with downside to $10-11 depending on the outcome of certain liabilities that are tough to call but have historically been money bad. We remain UW, especially following a pullback in higher quality, higher growth, more cash flush names,” the analyst continued.

How does Tusa’s bullish gamble weigh up against the word of the Street? It appears other voices are not as willing to bet on the industrial giant as well, as TipRanks analytics demonstrate GE as a Hold. Based on 14 analysts polled in the past 3 months, only one rates a Buy on GE stock, while 10 rate it a Hold, and 3 recommend a Sell. The 12-month average price target stands at $16.90, marking a nearly 14% upside from where the stock is currently trading.


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