GE Stock Hits 9-Year Low After Price Target Drop
Major selloffs after poor Q3 report.
GE stock dropped by nearly 6% on Friday, marking General Electric’s lowest share price level since March 2009. The drop in share price was due to JPMorgan Chase & Co analyst, Stephen Tusa, lowering GE’s price target from $6 to $10. Tusa also said that General Electric’s earnings report showed underperformance on all sides.
GE share price also took a hit after their Q3 earnings miss and downgrades from the three largest credit-rating firms. Month-to-date stock losses are near 15%. With year-to-date losses nearing 51%. To compare, the S&P 500 has made gains of 4% this year, with the DOW up 5%.
NYSE: GE is on target to have its worst year since 2008, where it made losses of 56%.
Tusa’s latest stock prediction for GE is the lowest analyst prediction on Wall Street for the company.
Tusa said this in a statement to why he decreased the GE stock prediction: “Some sell-side bulls now point to “liquidity concerns” as the driver of share price weakness, though this misconstrues the Real Bear Case (RBC) – namely $100 billion in liabilities and zero enterprise free cash flow even after a 95% dividend cut,”.
To respond to Tusa, General Electric released a statement saying how GE is a “fundamentally strong company” with a healthy liquidity position in the market.
“We are taking aggressive action to strengthen our balance sheet through accelerated deleveraging and position our businesses for success,” said a representative from GE.
GE stock is still plummeting due to the fact that many of the challenges that the company faces are still without solutions.
JP Morgan is staying firm with the undercutting of GE’s price target.
GE Stock Analysis
NYSE: GE has missed profit and revenue forecasts in Q3 and also said that the GE stock dividend would be cut. Investors were more concerned with the operating loss and cash-flow issues in the power division of the business. General Electric shares have dropped in eight out of nine trading days since the Q3 report.
The company also said that it would be reorganizing its power business. CFO, Jamie Miller, said that the challenges that GE’s power business faces “will persist longer and with impact”, which lead GE to miss full-year cash flow and earnings targets by a large amount. Metrics provided by FactSet.
For GE investors, these issues cannot be ignored. Many investors are not confident in the GE leadership team. Which is a major cause for concern.
It seems like General Electric’s leadership is focused on “reassuring investors” that the next quarter will be more hopeful than Q3. This may help reduce selloffs and stop GE stock plummeting in the near future.
GE Stock Price Forecast
Our Analysts give GE stock a forecast of $13.00 in the next 12-months.
City Of Hype analysts give GE shares a “HOLD” rating currently.