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What Do Analysts Recommend for General Electric after 2Q16?

Jessica Stephans - Author

Aug. 9 2016, Updated 9:04 a.m. ET

Analysts’ recommendations for General Electric

General Electric (GE) has a consensus rating of “buy” from Wall Street analysts. Of the 21 analysts surveyed by Bloomberg, 11 gave the company a “buy” rating, while nine gave it a “hold” rating. The stock received one “sell” rating. Wall Street analysts have given the stock a target price of $33.24 (as compared to $33.62 in 1Q16), which is 3.6% above July 22’s closing price of $32.06.

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General Electric’s recent ratings

Barclays gave an “overweight” rating to GE’s stock, with a target price of $34 on July 22. The target price implies a potential rise of 6.0% over July 22’s closing price of $32.06 per share.

RBC Capital Markets (RBC) gave the stock an “outperform” rating and a target price of $35 on July 22. The target price implies a potential rise of ~9.1% over July 22’s closing price of $32.06.

On July 22, Credit Suisse (CS) also gave the stock an “outperform” rating, with a target price of $34. This implies a potential rise of 6.0%.

What do these recommendations mean?

Interestingly, the number of Wall Street analysts covering GE has increased to 21 from 17 in 1Q16. There were no “sell” ratings for GE following its 1Q16 results, but following its 2Q16 results, one analyst gave the stock a “sell” rating.

Overall, General Electric has been performing well. Its strategic priorities for General Electric Capital Corporation’s asset sales are ahead of plans, with the deal pricing in the above expectations. GE’s 2Q16 results were better than expected, and GE maintained its 2016 earnings guidance despite a challenging oil and gas situation.

Industrial focus and simplification, product strategy, cost-saving initiatives, and the drop of the SIFI tag designation will further help GE to concentrate on its core expertise and growth. GE has reaffirmed its 2016 EPS target and expects to return ~$26 billion to shareholders.

The 2Q16 results validate the strength of GE. The company has put forth a good performance in a slow-growth environment, but sustainability of orders and margins will be crucial for the company.

If you’re interested in trading in industrials, you can look into the Fidelity MSCI Industrials Index ETF (FIDU) and the iShares Morningstar Large-Cap Value ETF (JKF).


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