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General Electric Shares Dip After Group Reaffirms Earnings Outlook
By: Vivek Kumar | March 10, 2022

• General Electric reaffirmed its profit predictions for this year despite rising input costs and supply chain bottlenecks.

General Electric shares fell over 1.4% in pre-market trading on Thursday after the company reiterated its already-lowered earnings forecast for this year at its Investors Day as surging inputs costs and supply chain bottlenecks continue to bite.

The Boston Massachusetts-based company forecasts adjusted profit for the year in the range of $2.80-$3.50 per share. The company expects its profit margin will grow by 150 basis points that will generate $5.5 billion-$6.5 billion in free cash flow. General Electric also predicted an operating profit of nearly $10 billion and a free cash flow of around $7 billion for next year.

In the fourth-quarter results, which was released in late January, the company reported quarterly adjusted earnings of $0.92 ? per share, beating the Wall Street consensus estimates of $0.83 per share. However, its revenue declined more than 7% to $20.3 billion from a year earlier. That missed analysts’ expectations of $21.5 billion.

General Electric stock fell 1.4% to $89.95 in pre-market trading on Thursday. The stock fell more than 3% so far this year after rising over 9% in 2021.

Analyst Comments

“Tail risks have been sufficiently managed over the past 4 years as to allow the particularly attractive Aviation and Healthcare franchises to be valued independently and pursue additional strategic optionality,” noted Joshua Pokrzywinski, equity analyst at Morgan Stanley.

“Power, pension, and Long-Term Care are no longer overarching drags on leverage, profitability, and cash. The catalyst path remains uneven, however, and deleveraging to unlock more equity value will ramp in earnest in mid-2022 through year-end 2023 as cash seasonality and Aviation aftermarket ramp. We see this as a good risk/reward framework today improving further as the year progresses.”

General Electric Stock Price Forecast

Fifteen analysts who offered stock ratings for General Electric in the last three months forecast the average price in 12 months of $112.33 with a high forecast of $132.00 and a low forecast of $55.00.

The average price target represents a 23.10% change from the last price of $91.25. Of those 15 analysts, 11 rated “Buy”, four rated “Hold”, while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $120 with a high of $160 under a bull scenario and $70 under the worst-case scenario. The investment bank gave an “Overweight” rating on the company’s stock.

Several analysts have also updated their stock outlook. UBS cut the price objective to $132 from $143. Credit Suisse lowered the target price to $116 from $122. RBC raised the price target to $113 from $108. BofA Global Research lashed the price objective to $132 from $140.

However, technical analysis suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator shows a selling opportunity.

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