GE Stock: Expect a Major Turnaround Soon

Posted On January 29, 2018 3:10 pm

GE stock is tanking amid the company’s bleak quarter results. General Electric recently announced that its power unit will face further losses in the year. GE Power revenue is declining due to a falling demand amid growth of renewable energy and solar farms. Analysts are issuing bearish ratings for GE stock amid declining sales. Most of the analysts believe that GE’s turnaround will take time. Recently, BK Asset Management analyst Boris Schlossberg said in an interview with CNBC that GE has turned into the “mangiest dog” of the Dow.

General Electric also said it was under investigation related to a $6.2 billion charge on an old insurance business. Goldman Sachs analyst Joe Ritchie said in a report that there is no “quick fix” for General Electric’s challenges. He thinks that the management changes will pay off in the future but it will take “a few quarters” for the turnaround to start. Ritchie cut his price target for GE stock from $18 to $16.

RBC analyst Deane Dray also cut his price target for GE shares from $20 to $17. The analyst thinks that the SEC probe adds a “negative overhang” to GE that will push investors to the sidelines in the near future.

But it should be noted that GE stock seems a good investment opportunity for long term investors. General Electric is a behemoth that is working on several projects to replace its legacy business. General Electric a pioneer in the Industrial Internet of Things (IIoT), which would have a total worth of about $15 billion by 2020. The company recently gave fiscal 2018 EPS that was better than the consensus estimate. General Electric also said it cut $1.7 billion in costs in 2017, beating the estimate of $1 billion. General Electric also plans to cut a whopping $2 billion in costs this year.

General Electric’s management is well-aware of the track the company needs to follow in order to tread on a turnaround path. Melius Research analyst Scott Davis said in a report that General Electric has almost bottomed and there is a huge upside to the stock. He thinks that nothing could bring GE stock out of its “abyss” by cost-cutting and selling unprofitable assets, including Aerospace or Healthcare.

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