General Electric (GE), the 125-year-old manufacturing veteran, lost as much as $6 billion in market valuation on Friday during intra-day trading, after a key analyst slashed its price target from $10 to $6. The revised price target by JPMorgan analyst Stephen Tusa is at a massive 29% downside from the current trading price.
Tusa’s price target of $6 is the lowest on the stock by any analyst. Taking into account the 17 analysts covering GE, the stock has an average price target of $12.73 with a moderate buy rating. The highest target is $21 given by Justin Bergner of Gabelli. The stock has 7 BUY, 8 HOLD and 2 SELL ratings.
GE stock fell up to 10% during intra-day trading on Friday as it sank to a 9-year low.
Justifying the price target slash, Tusa said in an investor note, “The outcome of GE results was worse than expected on almost all fronts. While liquidity is certainly debatable, we believe this is not really about liquidity, it’s about a deterioration in run rate fundamentals.”
General Electric had earlier stated that it expects to miss its own full-year guidance as the manufacturing giant removed John Flannery from its helm. GE board was apparently not happy with Flannery’s pace of restructuring.
Larry Culp, who took charge in October, is currently focusing on rebuilding the ailing power business. He also slashed the quarterly dividend to one penny to free up cash flow, but Tusa was unimpressed by the “restructuring measures.”
“We estimate material dilution from weak fundamentals and portfolio moves, with little in return, going against the notion from a year ago that the company could get $20 [billion] in value without diluting the run rate of earnings/FCF,” Tusa added.
GE stock has lost 55% of its value in the past 52 weeks.