JPMorgan's Tusa Stays Negative On General Electric Into Outlook Call

JPMorgan analyst Stephen Tusa remains negative on shares of General Electric into the company's outlook call. The analyst has a Neutral rating on the stock with a $6 price target. GE closed yesterday up 32c to $9.90.

Tusa continues to see "challenging fundamental math." The Power segment "does not turn fast," and Aviation fundamentals, as per free cash flow, are "not as strong as many assume and unlikely to get better near term," Tusa tells investors in a research note titled "GE Outlook Call Preview - Complex and Simple at the Same Time." Further, General Electric Capital Service will likely consume "material cash for the foreseeable future, all while lingering sector-high leverage leaves the company vulnerable," says Tusa. He believes GE management "continues to walk a fine line with many parties to keep in mind (ratings agencies, shareholders, employees), making the tone tough to call."

The analyst does not expect "much from a half hour of prepared remarks to change the dynamics." 

 

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