General Electric Gets a Boost From Another Analyst Upgrade

(Bloomberg) -- General Electric Co. received another vote of confidence on Wednesday after a top industrial analyst upgraded his rating on the stock, saying that while risk is still high, the company has near-term liquidity.

Vertical Research’s Jeffrey Sprague, who has been ranked the top analyst in the Institutional Investor poll several times, upgraded GE to a buy rating from hold. It’s his first buy rating on GE since April 2008, according to his research note. He also raised his price target to $11 from $10, saying he sees “a path to create equity value.” The shares rose 8.1 percent to $7.87 at 10:38 a.m. in New York.

Sprague’s call follows on the heels of another positive change in stance on the company last week, when long-time bearish analyst Steve Tusa at JPMorgan upgraded GE shares, saying that most of the risks faced by the company were now understood. After a nightmarish year, this recent shift in sentiment comes as a long-awaited reprieve for GE investors, whose relief is reflected in the stock. GE has gained more than 17 percent since Tusa’s upgrade.

“While the work ahead is still hard, we think the lack of investor confidence will slowly subside,” Sprague said in a note to clients. “New CEO Larry Culp has his hands full, but a talented outsider is what GE needs to fully break from the past.”

Sprague assumes GE will carry out its plan to exit transport, Baker Hughes, health care and other small businesses. And while the company is vulnerable to legacy liabilities down the road, he said it’s unlikely to face “a life threatening liquidity crisis.”

GE has filed confidentially for an initial public offering of its health-care unit, according to people familiar with the matter. A public filing is said to be likely to occur next spring.

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