Oppenheimer Gets Bullish on GE (GE), Upgrades to Outperform

Oppenheimer upgraded General Electric (NYSE: GE) today from Perform to Outperform and raised their price target from $17 to $18, citing a conservative sum-of-the-parts analysis.

The firm said the significant underperformance in GE since the middle of October provides a favorable entry point.

Oppenheimer sees the risk of external capital needs as minimal and sees signs of stabilization in GECC portfolio quality and notes that the core Infrastructure businesses are undervalued.

Some key points to support their buy rating included:

• At only 1.0x tangible book value, we estimate GECC is worth $38B currently.
  
• Before Infrastructure, we estimate $25B for GE's 80% stake in NBCU
  
• At $160B current enterprise value, implied Infrastructure valuation is only $95B or 6x EV/EBITDA, compared to 8.5x for industrials average
  
• While GECS remains a burden, the core industrial business has held up relatively well so far.

The firm's EPS estimates remain unchanged at $1.00 for 2009; $0.95 for 2010, $1.20 for 2011 and $1.40 for 2012.

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