GE shares fall as analysts downgrade and reverse previous gains

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "shares in General Electric (GE) hit 2.3% on Thursday after a downgrade by CFRA analyst Colin Scarola, reversing some of the week’s earlier gains. The stock has been trading 36% since the beginning of the year, down from 17% in the Dow Jones Industrial Average. “Data-reactid =” 12 “> General Electric shares (GE) hit 2.3% on Thursday after a downgrade by CFRA analyst Colin Scarola, reversing some of the week’s earlier gains. The stock has been trading 36% since the beginning of the year, down from 17% on the Dow Jones Industrial Average.

“We used to think that GE’s long-term profitability would increase with the deleveraging, but we now see a significant risk that the delinquent sales proceeds will be redirected by Biopharma to compensate for large operational losses in the aerospace, energy, and renewable energy sectors to stop, “Scarola told investors.

“Despite the cash burn that we expect for 2020, our lower rating is ultimately due to a very uncertain outlook for GE’s balance sheet and profitability in 2021 and beyond,” he said.

On Wednesday, the stock rose 3.8% after GE released its first quarter financial forecast and performance update.

GE announced that it initially anticipated adjusted first quarter EPS to be “significantly below” its previous forecast of approximately $ 0.10 on March 4, 2020, and withdrew its 2020 financial guidance.

However, investors were encouraged by the fact that GE tentatively anticipates industrial free cash flow will be close to the previous forecast of approximately $ 2 billion.

H. Lawrence Culp, CEO of GE, said: “We are taking rapid, company-wide measures to position GE to make it stronger on the other side of the COVID 19 crisis. With approximately $ 20 billion in net proceeds from this BioPharma transaction, we have more flexibility to reduce risk and further strengthen our balance sheet. We are determined to reduce our leverage over time when we are in this period of uncertainty. “

TipRanks shows that analysts have a moderate purchase consensus for GE, with 8 recent buy ratings versus 7 hold ratings. The average price target for analysts of USD 11 indicates an upside potential of almost 60%. (See GE’s stock analysis on TipRanks)

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