What happened

General Electric (NYSE:GE) stock has been a market whipping boy for more than a year, and its stock is down 55% since the beginning of 2017. GE received another kick to the gut this morning when analysts at investment bank JPMorgan tagged the stock with what is (for now) the most pessimistic price target on Wall Street.

This sent GE stock down 5% in early trading. It's still down 4.1% as of 12:15 p.m. EDT.

Red arrow breaking through floor

If GE can't deliver on its guidance, its stock -- and dividend -- could crash. Image source: Getty Images.

So what

JPMorgan wasn't all that enthusiastic about GE stock to begin with, according to the reporters at TheFly.com, having cut its rating on GE stock to "underweight" already. After crunching some numbers, though, the analyst is getting even more pessimistic, and adding a 22% price target cut to its analysis.

The reason is that, while most analysts seem to be taking GE's guidance at face value, and assuming the company is capable of earning a consistent $1 per share in GAAP profit, JPMorgan isn't so sanguine about the stock's chances. JP sees a "plausible case" for GE being able to generate about $0.50 per share in annual free cash flow. But JP does not agree with its peers that over time, earnings and free cash flow will line up at the $1 mark, with General Electric both reporting GAAP earnings of $1 a share, and also generating positive free cash flow of $1 to back up those earnings.

Now what

Instead, JPMorgan argues that the best GE investors can hope for is that the company will generate just enough free cash flow to cover its dividend -- $0.50 per share -- such that it might not need to cut it any further. And even that scenario is far from a certainty. Should JP's pessimism prove overoptimistic, there's still a possibility GE might need to cut its dividend even farther than it already has.

No wonder investors are nervous.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.