Analyst Shares Two Cents on General Electric’s (GE) New Slew of Head Honchos; Reiterates Outperform on the Stock
RBC Capital’s Deane Dray is taking notice of the leadership appointments made under General Electric’s (GE) new CEO Larry Culp’s watch. Dray says Culp’s decisive moves made in just his first eight weeks are already helping address the troubled Power segment.
“We believe that it took an outsider’s fresh eyes to dismantle the Power business, which had been operating with its own separate headquarters and a bloated $7 billion cost structure, and redefine what is core to GE.”
Monday’s news revealed three new and very important leadership announcements: 1.) John Rice, a 39-year veteran at GE who actually retired as GE Vice Chairman in 2017, was called back in as the new Chairman of GE Gas Power 2.) Scott Strazik, current President of Power Services, is the new CEO of GE Gas Power, and 3.) Russell Stokes, the current CEO of GE Power, who will serve as CEO of the new GE Power Portfolio.
The analyst shares his opinion on the new hires and how their appointment will affect the company: “We hold Mr. Rice in the highest regard and view this move as an inspired decision to leverage his deep domain expertise […] We view Mr. Strazik’s promotion as a classic move in Larry Culp’s playbook of promoting a high-potential, next-generation leader in a business that is being positioned for a turnaround. […] We expect Mr. Stokes to lead the efforts to monetize certain assets in the GE Power Portfolio that have no linkages with GE Aviation or Gas Power. That said, it remains to be seen how quickly the company can begin this methodical sell-down of the portfolio. There were unconfirmed media reports (Fox Business) on Nov-12 about private equity firms—some of which have GE alumni—that could be interested in bidding on parts of the GE Power Portfolio. We expect there to be healthy demand for these assets,” Dray said.
That being said, it’s easy to see Dray is bullish about the new management and the stock. He reiterates an Outperform rating with a price target of $13, which implies a 66% upside from where the stock currently holds. (To watch Dray’s track record, click here)
Dray is not the only keeping an eye on the GE burner. Out of 17 analysts, TipRanks finds 7 are bullish, 8 are sidelined and 2 are bearish. The consensus price target stands at $12.20, showing a 55% upside from where the stock is currently trading. (See GE’s price targets and analyst ratings on TipRanks)