Every day, Wall Street analysts upgrade some stocks, downgrade others, and “initiate coverage” on a few more. But do these analysts even know what they’re talking about? Today, we’re taking one high-profile Wall Street pick and putting it under the microscope…
The news struck like a thunderbolt: General Electric (NYSE: GE), the 126-year-old conglomerate that lost half its market cap this year and got kicked out of the Dow this month, is shedding roughly half its business units and slimming down to create a “simpler, stronger GE.”
Investors quickly reacted to the news by bidding GE stock up 8% yesterday, but on Wall Street, the reaction has been more muted — and mixed. Over the last 24 hours, StreetInsider.com (requires subscription) has recorded one upgrade — from Oppenheimer — but also one price target cut (by Cowen) and a separate negative note from JPMorgan. Only one analyst found GE’s announcement noteworthy enough to initiate new coverage of GE stock, and that analyst (Wolfe Research) only thinks GE stock is a hold.
Are you curious to know why Wall Street isn’t more enthusiastic? Here’s what these analysts are saying.
Image source: Getty Images.
Oppenheimer endorses (and Wolfe Research echoes)
Let’s start with the closest thing to good news about GE on Wall Street so far — Oppenheimer’s upgrade.
As I explained yesterday, GE’s plan is to:
- Sell off 20% of its healthcare businesses, and spin off the remainder of GE Healthcare to its shareholders as a separate company.
- “[F]ully” divest oilfield services company Baker Hughes, in which it currently has a 62.5% stake.
- And retain only its aviation, power, and renewable energy businesses as the new core of a “focused high-tech industrial company” — with a bit of GE Capital hanging around to help with financing the sale of its industrial equipment.
Summing up these several parts, Oppenheimer estimates that divesting GE Healthcare will yield $50 billion in “equity…
See more at: https://finance.yahoo.com/news/general-electric-says-apos-reinventing-172100922.html