BofA Securities Raises Estimates for General Electric (GE)
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BofA Securities analyst Andrew Obin reiterated a Buy rating and $15.00 price target on General Electric (NYSE: GE) while raising estimates after the company disclosed GECAS terms and 2021 outlook, which were both better than expected. Investors disliked the approximate $5bn cost to reduce factoring and delay in lowering leverage triggering a “sell the news” reaction but the analyst sees the simpler structure more likely to beat and raise in future quarters.
The analyst stated "Ever since the Global Financial Crisis, industrial investors have been uncomfortable with GE Capital, in our view. Plans to merge GECAS with AerCap will reduce GE Capital assets by about 25%. GE will then consolidate GE Capital with GE Industrial. The consolidation delays apparent deleveraging at GE Industrial by a year. But this is somewhat of an accounting construct, as overall GE will have a small asset base, less debt, and a lower overall risk profile. We note positive bondholder reaction and see a credible path to management’s target of below 2.5x net debt/EBITDA for the total company by 2023-end."
Shares of General Electric closed at $12.78 yesterday.
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