Extending the positive momentum seen towards the end of last year, General Electric (GE) started 2019 with a surprise gain. The company’s shares moved up about 7% Wednesday and were among the top S&P 500 gainers. When trading progressed, the stock hit the highest level since Mid-November, boosting the morale of CEO Larry Culp who has taken forward the multipronged restructuring program launched by his predecessor.
The current rally marks one of the best performances since the stock was removed from the Dow Jones list more than six months ago. While the trend is encouraging so far, the question is whether the industrial giant would be able to sustain it and achieve the much-needed turnaround.
When trading progressed on the second day of the year, the stock hit the highest level since Mid-November
In all likelihood, the stock will bounce back – after its value more than halved last year – once the ongoing reorganization stats yielding results. But the turnaround will depend a lot on the management’s ability to tackle the pressing challenges, including the revival of the company’s power segment and strengthening of liquidity.
Meanwhile, there is concern that the current uptrend could be temporary, like in the past when recovery often turned out to be short-lived. The picture is likely to become clearer after the fourth quarter earnings report, which is expected to be out before month-end. The market will be closely watching the progress in the implementation of the management’s turnaround strategy, while GE emerges from one of the worst years in its history.