GE Falls as JPMorgan Questions Whether Power Unit Can Be Saved

(Bloomberg) -- General Electric’s power unit issues are “bad and certainly nowhere near as salvageable as bulls think,” JPMorgan analyst Stephen Tusa wrote in a note after the beleaguered manufacturer detailed its plans to reorganize the unit and slashed its dividend to save $3.9 billion a year. The stock is poised to open at its lowest in about nine years.

  • “Higher level, a lack of tangible action and/or commentary from the new CEO goes against the bull case that this change was heavily due-diligenced with a plan already in place,” Tusa wrote in a note reiterating his underweight rating before the conference call began.
  • The dividend cut to 1 cent from 12 cents isn’t a “silver bullet, and the severity highlights the challenged capital position here,” Tusa wrote
  • GE has 8 buys, 13 holds, 3 sells, average price target $14, according to data compiled by Bloomberg
  • Shares fall 4.8 percent pre-market to $10.62; the stock hasn’t been that low in regular trading since July 2009

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