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What Analysts Are Recommending for GE before Its 2Q16 Results

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Jul. 13 2016, Updated 11:07 a.m. ET

Analysts’ recommendations for General Electric

General Electric (GE) has a Wall Street analyst consensus rating of “buy.” Of the 20 analysts surveyed by Bloomberg, 11 gave the company “buy” ratings, nine gave it “hold” ratings, and none gave it “sell” ratings. Analysts have given GE a price target of $33.88, 7.6% higher than its July 1 closing price of $31.49.

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General Electric’s recent ratings

Barclays gave an “overweight” rating to GE’s stock with a price target of $34 on April 22, 2016. This price target implied an 8.0% potential rise compared to July 1’s close of $31.49.

RBC Capital Markets (RBC) gave an “outperform” rating to GE with a price target of $33 on April 22, 2016. The price target implied a ~4.8% potential rise over its July 1 close.

Credit Suisse (CS) also gave an “outperform” rating to GE, with a price target of $34 on April 22, implying an 8.0% potential price rise over its July 1 close.

What do these recommendations mean?

Interestingly, analysts’ coverage of GE has risen from 17 to 20 analysts, with a majority having “buy” ratings.

We believe GE’s strategic priorities, such as its sale of General Electric Capital Corporation’s (GECC) assets, are ahead of plan, with the GECC deal coming in above expectations.

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

GE’s 1Q16 results validated its strength. The company has put forth a good performance in a slow growth environment.

The company’s major concern is its oil and gas segment. It expects the segment’s operating profit to fall by 30% in 2016. GE’s other segments, including power, aviation, and healthcare, are performing well. We look forward to July 22, 2016, to analyze each segment’s performance and to see if GE maintains its guidance for 2016.

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

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