Deutsche Cuts Estimates on GE (GE); Stock Down 5%

Shares of General Electric (NYSE: GE) are getting smashed once again today, currently down 5.1% to $13.37. The stock is tumbling with the broader markets this morning, but may also be seeing further downside on the back of a Deutsche Bank research report in which an analyst slightly lowered his Q4 and FY09 estimates on GE.

The Deutsche analyst believes "GE is likely to report a quarter scarred by restructuring charges and a large tax credit." GE is expected to report its Q3 results on Friday, January 23. Deutsche lowered its Q4 EPS estimate on GE from $0.38 to $0.37 and its FY09 estimate from $1.40 to $1.35. The Street is currently expecting Q4 and FY09 EPS of $0.43 and $1.39, respectively.

Deutsche believes that sentiment surrounding General Electric will be dictated by:

1. any revisions to the '09 framework
   
2. concerns about the sustainability of the GE Capital negative tax rate
   
3. the possibility of goodwill writedowns
   
4. the dividend vs. AAA debate - the firm said it sees "the AAA as more susceptible given the much lower opportunity cost of accepting a downgrade to AA."

The Deutsche report notes that the recent dip in shares of GE have returned the stock to "the valuation orbit of its peers, with the stock trading at 10.4x 2009E." The analyst believes GE stock could "find a floor close to current levels, since at $11-12, GE Capital is effectively priced as a free option."

Deutsche Bank reiterated its Hold rating and $18 price target on General Electric.

Notably, shares of GE are now only about 6.3% above its 52-week low of $12.58. Over the last 3 trading sessions, shares of GE have fallen about 15.5% and since mid-December, the stock is down nearly 30%.

General Electric Company (GE) operates as a technology, media, and financial services company worldwide.

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