- Goldman Sachs is more bullish on General Electric (NYSE:GE) following a virtual meeting with the company's investor relations team. The firm even raised its 12-month price target on the stock to $15 (from $14), noting it implies a normalized 2022 FCF yield of 5.0%.
- "Overall, we came away encouraged by the FCF momentum/Power trajectory and the meeting reinforced our view that many of the tail risks (e.g., long-term care, pension, balance sheet, etc.) that have plagued GE's stock in the past are ring-fenced in the medium-term," Goldman wrote in a research note.
- "On FCF, we have a greater understanding of the conservatism baked into the Q1 guidance of "<$0 to -$2.2B" and 2021 guidance of "$2.5B to $4.5B." The bottom line is we think GE will beat consensus FCF expectations for Q1 (-$200M) and land within the top end of the FCF range for 2021 ($4B). For Q1, the carry over benefits from 2020 cash restructuring actions and working capital improvements should yield significantly better FCF than last year."
- "What underpins our confidence in 2021 FCF is the fact that the low end of the guide assumes no improvement in Aviation from current levels. Therefore, we see FCF risk/reward skewed to the upside given our view that travel will snap back in 2H as vaccines become more widely distributed."
- Goldman also thinks GE's "Outlook Call" scheduled for March 10 could be a positive catalyst for the stock. Seeking Alpha's Stocks To Watch recently flagged a Barron's mention that said GE was among its "restoring power" list to prevent another Texas crisis.