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GE’s Results Fail to Impress All as JPMorgan Says ‘Sell’

GE’s Results Fail to Impress All as JPMorgan Says ‘Sell’

(Bloomberg) -- General Electric Co.’s analysts are not joining the party yet, even after quarterly results topped estimates and the company raised its full-year outlook.

JPMorgan’s Stephen Tusa flagged weakness at the power and renewables segments and recommended selling the shares. The stock pared its pre-market gains, and was down as much as 3.2% in New York on Wednesday.

Here’s a roundup of analyst commentaries.

JPMorgan, Stephen Tusa

“The quarter was a miss operationally, with the combined Power/Renewables segments worse (despite no H-deliveries which is accretive), offset by modest upside at Healthcare and a material miss at Aviation, the key value driver.”

“Headline guide was raised, but we scratch our heads around why on the back of these results, as the segments are trending at best in line.”

“The stock is up on the headlines, as it has been many times before, but, like in the past, the underlying core fundamentals are actually a bit worse, and we remain underweight on this basis and would be selling into any strength.”

Gordon Haskett, John Inch

“Overall, we view the second-quarter results to be a modest step backward vs. expectations.”

Noted that the 5 cent increase in EPS outlook at the midpoint is “less than this quarter’s 6 cent tax benefit.”

“Subdued Aviation results prospectively temper the bull enthusiasm for this business and its independent valuation prospects, which we have pegged closer to $50 billion vs. the $100 billion that is frequently cited.”

Maintained underperform, price target $7.

Wolfe, Nigel Coe

“Industrial performance is less than perfect and the headline beat is on taxes, but the increased outlook is very encouraging despite Max cash headwinds through second half of 2019.”

“The reality is that 2019 is a transition year, with 2020/2021 the real bogeys for investors.”

“We believe this quarter is a positive stage post on the path to a more normalized EPS/FCF outlook in the ~$1 range.”

Maintained outperform, price target $15.

RBC, Deane Dray

“We doubt that many investors were expecting to see the 2019 guidance boost this quarter. The most important of these new targets is the boost to its 2019 free cash flow guidance.”

The “organic revenue boost is especially notable given the macro uncertainty and chorus of short-cycle woes across the sector this quarter.”

Maintained outperform, price target $13.

Barclays, Julian Mitchell

“Overall, there should be some relief from the raised 2019 EPS and free cash flow guides, and the solid backlog/orders amidst a choppy macro environment, although this is tempered somewhat by the weak margin performance in second quarter, and a portion of the raised free cash flow guide relates to lower cash restructuring spend.”

Maintained overweight, price target $13.

To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Dave Liedtka

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