What happened

The S&P 500 ended in the red today, down more than 1.2%, but one of the biggest industrial stocks on the market -- General Electric (NYSE:GE) -- glowed a healthy shade of green, closing up 3.5%.

You can probably thank Swiss banker UBS for that.

Green arrow trending up over the numerals 2021

Image source: Getty Images.

So what

UBS raised its price target on GE this morning, predicting that within a year, this stock that currently trades for $13 and change will hit $15 a share.

We don't know precisely what inspired UBS to increase its target right now. (StreetInsider.com, which reported the hike, doesn't have a whole lot of detail on that point.) But what we do know is that things have been looking up for GE for a while. Back in January, the company reported strong earnings for its fiscal Q4 and full-year 2020, delivering $4.4 billion in positive free cash flow when analysts had only expected $2.5 billion.

Now what

And UBS could be right about things getting even better for GE as the year progresses. In its Q4 report, GE announced that it is targeting free cash flow of between $2.5 billion and $4.5 billion this year. Even at just the midpoint of that range, this is $700 million more than analysts were forecasting, implying that GE's Q4 beat won't be its last.

Nor is UBS alone in expecting GE to bring good things to life in 2021. Late last month, Goldman Sachs predicted a second earnings beat for the industrial giant as early as Q1 this year, with positive free cash flow of perhaps $200 million. Goldman Sachs is looking forward to the day when the country turns the corner on the coronavirus pandemic, and airlines resume buying airplanes (and airplane engines, which GE makes) in anticipation that travelers will start to travel again later this year.

Does this prospect justify a $15 stock price for GE? Well, consider: At just under $119 billion in market capitalization currently, even a $4.5-billion-free-cash-flow year in 2021 would value the stock at more than 26 times free cash flow at current prices -- and more than 29 times free cash flow at the share price UBS is projecting.

Personally, that seems a bit steep to me, especially when you consider that $4.5 billion is the most GE thinks it could make this year. The less cash it generates, the more overpriced the stock begins to look.

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.