General Electric (GE) CEO Larry Culp’s intent and quick actions to get the company on a growth trajectory have been helping General Electric stock gain analysts’ confidence. On January 14, Nicholas Heymann of William Blair gave bullish remarks on General Electric stock.
In a note to analysts, Heymann said that the company could get relief from uncertainties related to liquidity, ongoing investigations on accounting practices, and struggling power and gas businesses in a few months. He thinks that General Electric’s risk profile should improve significantly over the next few months.
Heymann said, “We believe investors’ perception of GE is likely in the near term to undergo a potentially accelerated three-part transformation” of reduced risk, lowered debt and a turnaround for the power business,” according to a CNBC report.
Heymann is also optimistic that General Electric’s restructuring activities could help enhance its liquidity position. He thinks that the planned IPO of the Healthcare division, the separation of GE Digital assets, and a probable sale of the GE Commercial Aviation Service business could enhance the company’s liquidity position by $50 billion–$55 billion.
Heymann reiterated his “outperform” rating on the stock.
Recent rating upgrades
In the past month, various top research firms including JPMorgan Chase (JPM) and Vertical Research have been optimistic about General Electric’s restructuring efforts. On December 13, JPMorgan Chase analyst Stephen Tusa upgraded his rating on the stock to “neutral” from “underweight.” In a note to clients, Tusa wrote that the company’s risk-reward appears to be balanced at the current levels.
On December 19, Vertical Research analyst Jeffrey Sprague upgraded his rating on General Electric for the first time in ten years. He upgraded General Electric to “buy” from “hold” and raised the target price by $1.00 to $11.00. Sprague has been the top-ranked analyst several times.
In a note to clients, Sprague said that General Electric will complete its restructuring plan, which includes exiting Baker Hughes (BHGE), healthcare, transport, and other smaller businesses. He doesn’t think that General Electric will face a severe liquidity crisis in the long run.