Tuesday, 23 April 2024

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GE shares target cut by Deutsche Bank, retains buy rating By Investing.com

General Electric Files $20B Mixed Shelf By Investing.com

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On Wednesday, Deutsche Bank adjusted its price target for General Electric (NYSE:) shares, lowering it to $190 from the previous $210, while still recommending a Buy rating for the stock. The revision follows the completion of the spin-off of GE Vernova, which prompted the bank to change its valuation method for GE.

The new valuation is now based on a free cash flow (FCF) approach, as opposed to the previous enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) methodology. Deutsche Bank’s analysis sets the price target based on a 3.5% FCF yield on the projected 2026 FCF per share of $6.67, leading to the updated $190 target.

The target price implies a 40% upside potential from the current trading price. Deutsche Bank justifies the premium price target with several factors. They cite GE’s “wide moat,” which refers to the company’s competitive advantage, its dominant market share, and its strong position for long-term growth. Other factors enhancing GE’s value include its pricing power, high return on total capital (ROTC), substantial balance sheet flexibility, and a consistent history of financial performance exceeding expectations.

Deutsche Bank emphasizes that, with a 40% potential increase to the target price, General Electric remains one of their top picks in the Aerospace and Defense (A&D) sector. The firm’s positive outlook on GE is rooted in the company’s robust fundamentals and strategic positioning within the industry.

InvestingPro Insights

As General Electric (NYSE:GE) maneuvers through its recent corporate changes, the insights from InvestingPro provide a real-time snapshot of its financial health and market sentiment. The InvestingPro Data indicates a market capitalization of $149.2 billion, reflecting GE’s substantial presence in the industry. Although the company has a P/E Ratio (Adjusted) of 28.78 as of the last twelve months ending Q4 2023, which may suggest a higher valuation compared to earnings, its revenue growth of nearly 17% over the same period underscores a strong capacity for generating sales. Additionally, the impressive EBITDA growth of 78.05% highlights the company’s increasing profitability before accounting for certain financial considerations.

From the perspective of InvestingPro Tips, two key insights stand out. Analysts have revised their earnings estimates upwards for the upcoming period, which may signal confidence in GE’s future performance. Moreover, the stock is currently…

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