GE Biggest Bear Says Results ‘Far From a Blowout’ Post Rally
(Bloomberg) -- General Electric Co.’s first-quarter results were “far from a disaster, but also far from a blowout,” JPMorgan analyst Stephen Tusa said in a note to clients Wednesday, adding that results this year would have to be better in order to support a “stretched consensus.”
GE closed up 4.5 percent on Tuesday after first-quarter cash and profit topped analysts’ estimates, and it didn’t flag any new or unexpected negative development. The stock gained as much as 1.1 percent on Wednesday.
The focus for investors and analysts this quarter was on cash, and while GE’s free cash flow surpassed expectations, Tusa noted that the big beat highlighted the “lumpy nature” of the metric. The analyst said there still remained substantial hurdles to a sharp recovery in free cash flow in 2020/2021, “that starts with a material cut to second-quarter consensus expectations.”
Tusa, who had upgraded GE to the equivalent of a hold rating in December and reversed his stance in early April, also raised questions about the low level of restructuring in the company’s troubled power business, despite management noting as recently as March that there would need to be more urgency around restructuring.
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