General Electric shares tumble on JP Morgan analyst’s downgrade
The top-rated analyst says investors are underestimating the severity of challenges and underlying risks at the conglomerate
Bengaluru — Shares of General Electric fell more than 7% on Monday after JP Morgan’s Stephen Tusa, a top-rated analyst, downgraded the stock and further cut his price target to a Street-low of $5. Tusa, a long-time bear on the stock, cited significant liabilities and little free cash flow to support the company’s ongoing reset and cut his rating to “underweight” from “neutral”, an about-turn from an upgrade in December. “Investors are underestimating the severity of challenges and underlying risks at GE and overestimating value of small positives,” Tusa wrote in a note. Tusa said investors are “significantly over-projecting” the bounce in free cash flow and sees weakness in the company’s power and renewables unit. Listing the challenges faced by the industrial conglomerate, Tusa said GE Capital Services unit is likely to consume cash for the foreseeable future, with aviation fundamentals weaker than what meets the eye. GE could lose as much as $2bn in cash from its industrial busine...
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