General Electric Shares Gain As Goldman Names Top Ideas In Big Cap Stocks
General Electric (GE) - Get Report shares bounced higher Tuesday after analysts at Goldman Sachs highlighted the group as the "ultimate" re-opening stock in the industrial sector and one of its "top ideas" in the large cap space.
Goldman, which carries a 'buy' rating with a $16 price target on the stock, said GE could lift its industrial free cash flow (FCF) "towards the high end" of its $2.5 billion to $4.5 billion range over the second half of the year, with upside potential in the coming years from a recovery in the aerospace and renewable energy sectors.
"We view the next chapter for GE, beyond our $16 price target, as being driven by +(double-digit) FCF margins (or $1/sh in FCF), which would imply a $20+ valuation," Goldman said in a client note. "Lastly, GE is the most rate sensitive stock in our coverage, and the GS Econ view is for rates to rise to 1.9% by year-end."
General Electric shares were marked 2.25% higher in early trading Tuesday to change hands at $13.18 each, a move that would extend the stock's year-to-date gain to around 22%.
TST Recommends
Canadian Solar Lauded for Plan to List Unit on Shanghai Exchange
Canadian Solar applied for an IPO of its CSI Solar subsidiary on the Shanghai Stock Exchange. Roth Capital likes the idea.
Earlier this month, GE it will proceed with its planned one-for-eight stock split on July 30, with shares trading on the adjusted basis as of August 2.
GE unveiled the split plans in early May that it said would "reduce the number of shares outstanding "to a number more typical of companies with comparable market capitalization".
That followed a 2021 financial update that repeated industrial revenues will grow "organically in the low-single-digit range" while earnings should come in between 15 cents and 25 cents per share. Industrial free-cash flow, GE said, is forecast in the range of $2.5 billion to $4.5 billion.
GE, which will publish its second quarter earnings on July 27, posted stronger-than-expected first quarter earnings of 3 cents per share in late April, as revenues jumped 16.6% to $17.1 billion, but held off on boosting its full-year profit forecast amid the ongoing hit to its aviation business from the global coronavirus pandemic.
Last month, Citigroup analyst Andrew Kaplowitz pegged a $17 price target on GE, alongside a reinstated 'buy' rating, amid what he said was evidence of improvements across the whole of its business portfolio under CEO Larry' Culp's turnaround plans that could trigger "material upside" in GE shares.
