General Electric shares fall the most in three weeks on Friday, Deutsche Bank revises down price target on the stock to $7

December 3, 2018 10:16 am

Deutsche Bank was reported to have revised down its price target on General Electric Company (GE) to $7 from $11 previously, as it noted that revenue from GE’s burdened power unit “remains flattish but does not continue to decline.” Even in the bank’s bear case, however, it does “not forsee a liquidity crisis” for GE.

Deutsche Bank also maintained a “Hold” rating on the stock.

General Electric shares closed lower for the eighth time in the past thirteen trading sessions in New York on Friday. It has also been the steepest daily loss since November 12th. The stock went down 5.54% ($0.44) to $7.50, after touching an intraday low at $7.40, or a price level not seen since November 28th ($7.37).

Shares of General Electric Company have retreated 57.02% so far in 2018 compared with a 3.24% gain for the benchmark index, S&P 500 (SPX).

In 2017, General Electric’s stock plummeted 44.78%, thus, it again underperformed the S&P 500, which registered a 19.42% return.

“We think the key debates can be boiled down to the trajectory of GE Industrial [free cash flow] and whether the company is headed for a liquidity crisis,” Deutsche Bank analyst Nicole DeBlase wrote in a client note, cited by CNBC.

According to DeBlase, “new detailed base and bear case” free cash flow analyses have been laid out by the bank, but, on the other hand, the latter will “ignore the bull case for now since it probably wouldn’t be viewed as credible.”

DeBlase said that Deutsche Bank’s most likely scenario, or base case, envisaged $0.34 per share of free cash flow for General Electric next year and $0.25 per share of free cash flow in 2020.

The analyst also noted that the upside for the industrial conglomerate under the bank’s base case could be translated into “positive trends in the company’s Power business, upside to debt reduction targets, improved margin dynamics in the company’s renewable energy business, general economic strength.”

According to CNN Money, the 18 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $11.00, with a high estimate of $21.00 and a low estimate of $6.00. The median estimate represents a 46.67% upside compared to the closing price of $7.50 on November 30th.

The same media also reported that 11 out of 22 surveyed investment analysts had rated General Electric’s stock as “Hold”, while 8 – as “Buy”. On the other hand, 2 analysts had recommended selling the stock.

Weekly Pivot Levels

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

Central Pivot Point – $7.59
R1 – $7.91
R2 – $8.33
R3 – $8.65
R4 – $8.98

S1 – $7.17
S2 – $6.85
S3 – $6.43
S4 – $6.02

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