General Electric (GE) PT Raised to $15 After Goldman Sachs Hosts Virtual NDR

Goldman Sachs analyst Joe Ritchie raised the price target on General Electric (NYSE: GE) to $15.00 (from $14.00) after hosting a virtual investor meeting with GE’s Investor Relations team and coming away encouraged by the FCF momentum/Power trajectory and the meeting. This reinforced the view that many of the tail risks (e.g., Long-term Care, Pension, Balance Sheet, etc.) that have plagued GE’s stock in the past are ring-fenced in the medium-term.

The analyst reiterated Buy rating, stating "The bottom line is we think GE will beat consensus FCF expectations for 1Q (GS: -$200mn) and land within the top end of the FCF range for 2021 (GS: $4.0bn). For 1Q, the carry over benefits from 2020 cash restructuring actions and working capital improvements should yield significantly better FCF than last year. What underpins our confidence in 2021 FCF is the fact that the low end of the guide assumes no improvement in Aviation from current levels. Therefore, we see FCF risk/reward skewed to the upside given our view that travel will snap back in 2H as vaccines become more widely distributed. Lastly, we think the March 10th Outlook call could be a positive catalyst for the stock. While the call will certainly dig into the key considerations for 2021, we think the most important takeaway for investors will be a better understanding of the EBITDA/FCF trajectory over the next few years."

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