Categories Analysis, Industrials

GE stock takes a hit over uncertainty due to coronavirus

General Electric’s (NYSE: GE) stock stayed in the red territory during afternoon hours on Wednesday after the company provided investors with an update on its outlook, the impact of the coronavirus outbreak, and the Max groundings.

The company expects industrial organic revenues to grow by low single digits in fiscal-year 2020. Adjusted EPS is expected to be $0.50-0.60 while industrial free cash flow is expected to come in the range of $2 billion to $4 billion.

GE said it is monitoring the health situation in China, which is an important market for the company. China represents around 9% of annual Industrial segment revenues. The company expects the coronavirus outbreak to have an impact of $300-500 million on its industrial free cash flow and $200-300 million on its operating profit in the first quarter of 2020. Adjusted EPS is expected to be $0.10 in Q1.

Also read: Will Hewlett Packard (HPE) see light at the end of this tunnel?

For its Aviation segment, GE expects revenues to grow in the low single digits. The company expects to see a slight contraction in demand for 2020 with strong underlying fundamentals for air travel.

With regards to the 737 Max grounding impacts, GE said it has secured payment terms with Boeing (NYSE: BA) on deliveries for 2020 and on parked aircraft. The production volume for 2020 and the first half of 2021 have been secured.

GE’s stock has dropped 15% in the past one month. Shares were down slightly by 0.60% in afternoon trade.

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