Shares of General Electric Co. slumped 1.8% in premarket trade Thursday, after J.P. Morgan slashed its price target, citing an uncertain outlook and a lack of growth potential. Analyst C. Stephen Tusa reiterated his bearish underweight rating on the industrial conglomerate, and cut his stock price target to $22, which is 20% below Wednesday’s closing price of $27.35, from $27. The stock traded at $26.85 ahead of the open; the stock hasn’t closed below $27 since Oct. 5, 2015. Tusa said the GE narrative “is as open and undefined as it’s been in decades,” with the new CEO likely to set the course over the second half of the year on a material restructuring that includes setting portfolio priorities, a change in the capital allocation strategy and new long-term growth targets. While a fresh start is expected under John Flannery, who will become CEO on Aug. 1, but “we don’t see a quick or easy fix to the current predicament,” Tusa wrote in a note to clients. “Unlike other resets where the multiple expands, we don’t see the future growth potential as a catalyst here, and are cutting our price target to $22 and remain [underweight].” The stock has dropped 13.5% year to date through Wednesday, while the Dow Jones Industrial Average has gained 8.7%.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
From:: Stock Market News