Goldman Sachs analyst Joe Ritchie reinstated coverage of General Electric (GE) with a Buy rating and $10 price target. The stock closed Thursday up 34c to $6.65.

In the two years since Larry Culp became CEO, management has made progress in making GE a "leaner, structurally more productive company with better capital discipline," Ritchie tells investors in a research note. While the pandemic has caused delays in the transformation, GE will emerge as a stronger company, says the analyst. Ritchie's base case is that a Covid-19 vaccine will be mass distributed over the next 12 months and the second derivative improvement on air travel "will be significant." The analyst, who expects GE's 2020 free cash flow will be negative $3.2B, is "simply making the call that as GE's higher-margin businesses recover, FCF will improve materially."

Ritchie sees a 50% upside to the firm's 12-month price target, implying a 6.5% 2023 free cash flow yield. Further, Goldman's derivatives strategist views the call options as attractive ahead of the company's Q3 earnings, and recommends buying the November 2020 $7 calls, says Ritchie.