General Electric (GE): A Momentum Play?

Yesterday it was Goldman Sachs talking about new-found momentum for General Electric (NYSE: GE), today JP Morgan made their case for GE as a momentum play.

JP Morgan analyst C. Stephen Tusa, Jr. said, "for the first time in over 10 years, the pieces are in place for earnings upside, a key to moving GE from value to momentum."

Investors appear to be in agreement with these analysts, with shares of GE up 7.5% since Friday of last week and reaching a new 52-week high today.

Laying out his case for GE as a momentum story, Tusa noted that while investors focus on credit losses at GE Capital, those losses are peaking and the unit could add an estimated tailwind of $0.90 per GE share. He also sees upside to portfolio margin in 2011 and, by 2013 a potential of approximately $3B of tailwind.

Tusa thinks GE Capital can earn $2B in 2010 and $4B in 2011 versus 2010 guidance of approximately $1.75B.

The firm still sees normalized GE earnings of about $2 in 2013, though the trajectory, especially at GE Capital, is likely to be more front end loaded, which they said is a positive.

Tusa said while GE is still considered a value play by most, positive revisions would move GE decidedly into the momentum camp.

JP Morgan reiterated their Buy rating and $22 price target on GE, providing another 24% from the current market price of $17.75.

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