Please ensure Javascript is enabled for purposes of website accessibility

General Electric Stock Has Nearly 30% Upside, Says Analyst

By Eric Volkman - May 14, 2021 at 9:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The fallen company is showing definite signs of improvement, believes a Citigroup prognosticator.

It's an understatement to say that onetime U.S. industrial titan General Electric (GE 2.28%) has fallen out of favor with investors in recent years. But the beaten-down stock has a new bull in Citigroup (C 1.52%) analyst Andrew Kaplowitz, who Friday resumed the bank's coverage of the stock with a buy recommendation and a $17 per share price target.

At General Electric's most recent closing stock price, that level would represent 28% upside if achieved.

A jet engine being repaired.

Image source: Getty Images.

The prognosticator wrote in a note to clients that:

With evidence of improving execution across much of GE's portfolio and given our expectation of gradual but likely accelerating recovery in GE's Aviation business particularly in [the second half of 2021] and beyond, we see material upside in GE's shares as demand recovery and operational improvements support growing and more consistent/sustainable cash flow generation in '21 and beyond.

Since falling on hard times, General Electric has attempted to streamline its once-sprawling collection of businesses to become a leaner company with a tighter focus.

Righting such a massive ship is no easy or quick task, however. The company's first-quarter results, published at the end of April, indicate that it's still struggling to meet this ambition. Even though General Electric beat the somewhat diminished expectations of the analysts following it, the company's total revenue fell by 12% on a year-over-year basis. Non-GAAP (adjusted) net profit fared worse, experiencing a 20% tumble.

Yet Kaplowitz opined that General Electric's efforts to slim down and complete its recovery are "largely on-track." He pointed to the company's success in fighting operating margin declines in its big aviation business as an example of this. 

"More broadly, our sense is that GE's overall focus on simplification of its portfolio and operations continues to gain traction throughout the company," the analyst added.

 

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
GE
$78.90 (2.28%) $1.76
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$54.00 (1.52%) $0.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.