General Electric shares register their largest weekly loss since March 2009 ahead of fourth-quarter results

January 22, 2018 11:03 am

Shares of General Electric Company (GE) extended their losing streak on Friday to complete the worst week since the financial crisis, following the announcement of over $11 billion in charges as well as indications of a possible break-up.

General Electric shares closed lower for a fifth consecutive trading session on Friday. The stock went down 3.04% ($0.51) to $16.26, after touching an intraday low at $16.02, or a price level not seen since December 1st 2011 ($15.73).

In the week ended on January 21st the shares of the industrial conglomerate lost 13.33% of their market value compared to a week ago, which marked the first drop out of three weeks. It has also been the worst performance since the week ended on March 8th 2009.

The stock has extended its loss to 6.82% so far during the current month, following a 4.59% slump in December. The latter has been a tenth consecutive month of losses.

For the entire past year, General Electric shares plunged 44.78% following a 1.44% increase in 2016.

Selling pressure intensified after on Tuesday the conglomerate said it expected to incur over $11 billion in tax, impairment and insurance charges.

At the same time, the company’s Chief Executive Officer John Flannery said GE was looking at a further break-up. He explained that options were being examined for GE’s power equipment, aviation and health care units, which might lead to “many, many different permutations, including separately traded assets really in any one of our units”.

“The company has a more complicated issue than just making some changes to its business portfolio”, Robert Pavlik, chief investment strategist at SlateStone Wealth LLC, said, cited by Reuters.

Meanwhile, in a research note on Friday, Deutsche Bank’s John Inch said that General Electric might, in the end, be forced to raise equity capital due to its “cash squeeze” and debt pressure.

The analyst also noted that there was now a greater probability of a further reduction in the company’s dividend.

The industrial conglomerate has already slashed its planned full-year 2018 dividend to $0.48 per share from $0.96 per share in 2017. It has been the third time, when GE cuts dividend in its 125 years of business history.

Inch has rated General Electric’s stock as “Sell” with a price target of $15.00.

The company is scheduled to report fourth-quarter earnings on January 24th.

According to CNN Money, the 14 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $19.50, with a high estimate of $28.00 and a low estimate of $15.00. The median estimate is a 19.93% surge compared to the closing price of $16.26 on January 19th.

The same media also reported that 9 out of 19 surveyed investment analysts had rated General Electric’s stock as “Hold”, while 7 – as “Buy”. On the other hand, 3 analysts had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the General Electric stock are presented as follows:

R1 – $16.33
R2 – $16.39
R3 (Range Resistance – Sell) – $16.46
R4 (Long Breakout) – $16.65
R5 (Breakout Target 1) – $16.88
R6 (Breakout Target 2) – $16.98

S1 – $16.19
S2 – $16.13
S3 (Range Support – Buy) – $16.06
S4 (Short Breakout) – $15.87
S5 (Breakout Target 1) – $15.64
S6 (Breakout Target 2) – $15.54

By using the traditional method of calculation, the weekly levels of importance for General Electric Company (GE) are presented as follows:

Central Pivot Point – $16.93
R1 – $17.84
R2 – $19.42
R3 – $20.33
R4 – $21.24

S1 – $15.35
S2 – $14.44
S3 – $12.86
S4 – $11.28

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