How Analysts View General Electric Leading Up to 1Q17

In this article, we’ll review analysts’ recommendations for General Electric (GE) ahead of its 1Q17 earnings release on April 21, 2017. Wall Street analysts seem to be divided over GE. Of the analysts surveyed by Reuters, 31.2% have made “strong buy” recommendations. An equal percentage have made “buy” and “hold” recommendations on the company, and 6.3% have made “sell” recommendations.

In terms of GE’s peer group, one-third of analysts have given Honeywell International (HON) “strong buy” recommendations, while 48% of analysts have given it “buy” recommendations. United Technologies (UTX) has 14% of analysts suggesting “strong buys,” while 27% of analysts have given it “buy” recommendations and 55% have given it “holds.”

A total of 22% of analysts have “strong buy” recommendations on Illinois Tool Works (ITW), and 22% have “buy” recommendations on the stock. Half of the analysts covering ITW have given it “hold” recommendations. At 17%, 3M Company (MMM) has the highest percentage of “sell” recommendations in GE’s peer group.

Investors interested in GE could opt for the iShares Global Industrials ETF (EXI). GE makes up 6.6% of EXI’s portfolio.

Following General Electric’s 2Q16 results, the company received one “sell” recommendation. If we look at analysts’ advice on GE, most have “buy” recommendations on the stock. However, the company’s stock price nosedive in 1Q17 has reflected the overall market sentiment.

Analysts are banking on GE’s digital industrialization drive, which offers billions of dollars worth of opportunity to the company worldwide. The tectonic shift from the industrial to the digital industrial will most likely increase margins for the company through its Predix system platform. Further, the company’s push on additive manufacturing should help it to expand its operating margins in the quarters to come.

Analysts seem to have factored in possible benefits to GE via President Donald Trump’s nationalistic policies. Though these policies might take the time to materialize, GE would be a direct beneficiary of Trump’s “American-manufactured” agenda. Emerging markets such as China and India will also likely fuel GE’s growth due to their demand for the company’s infrastructure products.