General Electric Extends Slide as Oppenheimer Lowers Rating to Perform
General Electric (GE) – Get Report shares extended declines Thursday after analysts at Oppenheimer lowered their rating on the industrial group following a 122% rally for the stock over the past six months.
Oppenheimer analyst Christopher Glynn said the group’s foundation remains ‘solid’ under CEO Larry Culp and the ongoing turnaround he has steered since taking the helm in October 2018, but reduced his rating by one-notch, to ‘perform’, now that shares have firmly eclipsed his previous price target of $13 per share.
GE reiterated its 2021 earnings and cash flow forecasts during it annual investor day event Wednesday, just hours after it finalized a deal to sell a majority stake in its aviation leasing business to Ireland’s AerCap for around $30 billion.
Glynn removed his GE price target, a practice consistent with perform-rated names at Oppenheimer, but noted that he sees “secure capital preservation on recent gains, given visible EBITDA recovery with pent-up demand for air travel” for GE, as well as a “solid liquidity profile.”
GE shares were marked 4.2% lower in pre-market trading Thursday, following yesterday’s 5.4% slump, to indicate an opening bell price of $12.69 each. The stock, however, is up 120% over the past six months.
Culp said GE’s industrial free-cash flow would grow to between $2.5 billion and $4.5 billion this year, adding that industrial revenues will grow “organically in the low-single-digit range” while adjusted earnings should come in between 15 cents and 25 cents per share.
GE also unveiled plans for a 1-for-8 reverse stock split that reduce the number of shares outstanding “to a number more typical of companies with comparable market capitalization”.
“Whether and when to effect it would be at the discretion of GE’s Board, at any time prior to the one-year anniversary of its 2021 Annual Meeting on May 4, 2021,” Ge said.
The AerCap deal, which GE said will help reduce its outstanding debt by around $30 billion, follows its 2019 sale of its aircraft financing business to private equity group Apollo Global Management for around $3.6 billon and mark yet another milestone in the ongoing GE turnaround under Culp.
GECAS added $120 million in profits to the group’s fourth quarter earnings, down $94 million from the same period in 2019.