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General Electric’s Q2: What Analysts Recommend ahead of Earnings

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Analyst recommendations for General Electric

General Electric (GE) has a Wall Street analyst consensus rating of “buy.” Of 20 analysts surveyed by Bloomberg, 11 gave the company a “buy” rating while nine gave it “hold” rating. Analysts have given a price target of $33.88 ($33.13 in 4Q15), 13.6% above June 24’s closing price of $29.82.

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General Electric’s recent ratings

Barclays gave an “overweight” rating on GE’s stock with a price target of $34 on April 22. The price target implies 14.0% potential appreciation over June 24’s close of $29.8.

RBC Capital Markets (RBC) gave GE an “outperform” rating with a price target of $33 on April 22. The target implies ~10.7% potential appreciation over June 24’s close.

Credit Suisse (CS) also gave an “outperform” rating with a price target of $34 on April 22, implying 14.0% potential price appreciation over June 24’s close of $29.8.

What do these recommendations mean?

Interestingly, analyst coverage on GE has increased from 17 to 20 analysts. The majority have “buy” ratings.

We believe GE’s strategic priorities, such as General Electric Capital Corporation’s asset sales, are ahead of plans, with the deal pricing above expectations.

Industrial simplification, product strategy, and cost saving initiatives have helped sustain GE’s margin in a slow-growth environment. GE has reaffirmed its 2016 EPS target and expects to return ~$26 billion to shareholders.

The company’s 1Q16 results did confirm its strength. The company has performed well in this slow-growth environment.

GE’s major concern is its oil and gas segment. It expects the segment’s operating profit to fall 30% in fiscal 2016. GE’s other segments, like power, aviation, and healthcare, are performing well. Let’s look forward to July 22, when we can analyze each segment’s performance to see if GE maintained its guidance for fiscal 2016.

Investors interested in trading industrials can look into the Fidelity MSCI Industrials ETF (FIDU) and the iShares Morning Star Large-Cap Value ETF (JKF).

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