General Electric retaliates after it dropped 4% in Monday’s trading session when JP Morgan reiterated its Neutral rating and pulled its $5 per-share price target.
General Electric (GE) closed yesterday’s trading session at $6.44, up by 4.04% compared to Tuesday’s close of $6.19. GE has retreated since its price drop on Monday by almost 4% followed by the bearish comments by a well-known analyst of JP Morgan, Stephen Tusa.
As per the note, analyst Tusa highlighted that General Electric lacks in the free cash flow and its enterprise value shows little equity value. She said that JP Morgan is more negative on GE heading into the remaining half of 2020.
Adding on further, the analyst mentioned that the American multinational conglomerate has no official earnings guidance, which reflects the business of GE looking three to six months out.
However, the Wall Street analysts are still pretty optimistic about General Electric based on its call for positive free cash flow in 2021 and long-term free cash flow target.
Second Quarter Strong Outcomes
Despite stronger than expected second-quarter results, it was not enough to pull back its price on Monday. The company reported its revenue was $17.7 billion missing the estimated $17.12 billion. The stronger-than-forecast revenues were mainly driven by sales in the power and renewable energy divisions.
The loss per share was $0.15 compared to the estimated loss of $0.10. Moreover, GE incurred a loss of $2.1 billion in industrial free cash flow, which was better compared to prior announced guidance by General Electric.
The Chief Executive Officer of GE, Larry Culp stated:
“Industrial free cash flow was better than our expectations and previously communicated range. We made faster progress on elements within our control, including our targeted cost and cash preservation actions.”
The company reported that it lowered its cost by more than $2 billion and its short-term needs were lowered by $10.5 billion in the second quarter. General Electric (GE) stock has pulled strong bearish momentum due to upheaval and unprecedented economic circumstances created by the COVID-19 epidemic. GE shares have dropped more than 38% in 2020 and due to GE’s dark time in 2020, Tusa is also going bearish on the stock.
After dropping 4% on Monday, General Electric (GE) has surged back once again crossing the $5 price mark. GE opened today’s market at $6.39 followed by the previous close of $6.44.
As of 10:48 A.M. EDT, General Electric (GE) stock was up by almost 2% trading in green at $6.55. Investors must keep an eye on the stock in the coming days, whether it will flow further bearish trend or come up against Tusa’s predictions.