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This Analyst Continues to Hold a Bullish View on General Electric (GE) Stock

support@smarteranalyst.com (Ben Mahaney)

Fresh off a successful showing at the Paris Air Show, the outlook is looking strong for General Electric (GE). Its Aviation unit — which has been impacted by the Boeing 737 Max grounding — seems to be making up ground in the form of new orders on its LEAP engine in Paris. But more importantly, GE continues to lure investors back to its stock — share prices are nearing its 2019 high, as Wall Street is increasingly optimistic about its restructuring efforts.

William Blair analyst Nicholas Heymann believes the enthusiasm is justified as he maintains his Outperform rating (To watch the analyst’s track record, click here)

Heymann is a big fan of new CEO Larry Culp. The analyst says, “it is becoming increasingly clear that Mr. Culp’s enhanced, accelerated, and more dynamic plan to restore GE to fundamental and financial health is not only beginning to work but is now beginning to steadily accelerate.” Heymann sees the addition of Culp as a major reason why GE’s stock is up more than 50% since its 52-week low in December. 

Aside from (or because of) Culp, Heymann sees GE shares rising “as confidence grows that GE Power’s turnaround is likely to be successful and GE’s financial leverage continues to improve.” The analyst says that Culp has made it a priority to “totally transform GE Power by radically altering the way the business is managed” and keeping better track of the market in order to keep up with long-term trends. 

Another segment pertinent to GE success is its Aviation unit. The unit manufacturers jet engines, including the new LEAP engine that is used by Boeing for its 737 Max. While the MAX aircraft is currently grounded, GE was able to find other homes for the engine. For example, major news last months out of Paris was that GE and low-cost Indian airline IndiGo came to a $20 billion agreement to retrofit their Airbus a320s and a321 with LEAP engines. While the Max is expected back in the air soon, GE is making use of selling for other aircraft as well. 

Though GE continues to work to get out of the hole it created and has seen its stock surge in 2019, many analysts are playing the waiting game. TipRanks analysis of 10 analyst ratings shows a consensus Hold rating, with three analysts rating the stock a Buy, five suggesting Hold and two recommending Sell. The 12-month average price target stands at $10.50, which aligns evenly with where the stock is currently trading. (See GE's price targets and analyst ratings on TipRanks)

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