GE post-earnings woes continue, as stock suffers worst month in more than 2 years

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Shares of General Electric Co. have kept falling in the wake of disappointing first-quarter results, putting them on track Friday for a fourth-straight loss to a 17-month low.

The losing streak was kicked off by the 10.3% plunge on April 26, the biggest one-day loss in two years, after the industrial conglomerate beat first-quarter profit and revenue expectations, but missed on free cash flow and provided a downbeat full-year outlook. Read more about GE’s earnings report.

GE shares GE, -4.18%, which shed 2.6% in afternoon trading on Friday, have now lost 15.7% in the four days since results were reported, and are headed for the lowest close since Nov. 13, 2020.

The stock has lost 17.2% in April, which would be the worst monthly performance since it plummeted 27.0% in March 2020, to underperform its peers and the broader stock market by a wide margin. The SPDR Industrial Select Sector exchange-traded fund XLI, -2.75% has lost 6.7% in April, while the S&P 500 index SPX, -3.67% has shed 7.9%.

FactSet, MarketWatch

The Wall Street analyst community remains mostly bullish on GE’s stock, however, with 15 of the 23 analysts surveyed by FactSet having the equivalent of buy ratings on the stock. And there are no bears, as the other eight analysts have the equivalent of hold ratings.

No less than nine analysts have cut their price targets since GE reported, to lower the average target to $107.88, down from $116.56 at the end of March. The lowered target still implies about 42% upside from current levels.

FactSet

BofA Securities analyst Andrew Obin was one of the bulls, as he reiterated his buy rating after GE’s earnings but lowered his price target to $120 from $132.

Obin said the “fear factor” for investors is a further cut to guidance, but he sees that as a “low probability.”

J.P. Morgan’s Stephen Tusa kept his rating at neutral, but it’s hard to say he wasn’t bearish as his stock price target of $55, which is the lowest on the Street, was about 27% below current levels.

Tusa said he believed GE’s lowered guidance was far from a reset, and is likely to be lowered even further. His 2022 adjusted earnings per share forecast was $2.20, while GE Chief Executive Larry Culp had said adjusted EPS was “trending toward the low end” of guidance of $2.80 to $3.50.

“Even normal seasonality, which is not a conservative assumption, supports something well below the low end of guidance on EPS, in our view, ” Tusa wrote in a note to clients.

“GE also has an above-average amount of Russia profit exposure, another headwind that makes a play on a quick turn a challenge,” Tusa added.