J.P. Morgan’s recent upgrade of General Electric (GE) shares from Hold to Buy marks a significant turnaround after more than a decade of caution. Analysts Seth Seifman and Mark Strouse, who cover aerospace and alternative energy respectively, jointly cover GE, emphasizing its strengths in the commercial aerospace sector. Despite GE’s outperformance in the market this year, the analysts see continued upside potential, particularly following the company’s planned split into GE Aerospace and GE Vernova on April 2. They highlight GE’s position as a premier player in commercial aerospace, backed by strong business fundamentals, favorable market conditions, a robust balance sheet, and competent management. While acknowledging that some of this positive outlook is already reflected in the stock’s valuation, they believe that it remains the primary obstacle to further gains.
The analysts have raised their price target for GE shares to $180 from $166, reflecting their confidence in the company’s future prospects. Despite the bullish sentiment, they acknowledge that making an upgrade at this point may not have a significant impact on their careers, given the stock’s remarkable performance over the past year. Indeed, GE’s stock has surged by more than 80% in the last 12 months, signaling a remarkable turnaround from its previous struggles.
This upgrade contrasts with a “career call” made by another J.P. Morgan analyst in May 2016, when GE stock was downgraded to Sell. The recent upgrade underscores the evolving narrative surrounding GE’s prospects and reflects the company’s efforts to regain investor confidence after facing significant challenges in recent years.
Stephen Tusa’s bearish stance on GE was indeed prescient, as he remained the lone bear among a group of 11 analysts who rated the stock as Buy back in 2016. At that time, the average target price for GE shares was $256, while Tusa’s target was notably lower at $208, eventually dropping further over time. His bearish outlook proved accurate when GE stock plummeted to below $45 a share by December 2018. Tusa maintained his bearish stance until coverage of GE was transferred to analysts Seth Seifman and Mark Strouse about a year ago.
GE’s stock has experienced a significant rebound since then, currently trading around $167.96, up 0.9% following the recent upgrade to Buy by J.P. Morgan. This positive shift in sentiment can be attributed to the strength of the company’s aerospace business and improving profit margins in the power segment.
Notably, Tusa had not rated GE shares as Buy since 2013, maintaining a Hold equivalent rating until his coverage was transferred. Seifman and Strouse initially started their coverage of GE with a Hold rating and an $88 stock price target in March 2023. Considering this, J.P. Morgan had not rated GE shares as Buy for over a decade, according to FactSet data.
Despite the recent upgrade, 68% of analysts covering GE still rate its shares as Buy, which is higher than the average Buy-rating ratio for stocks in the S&P 500. The average analyst price target for GE stock is approximately $171 a share, indicating continued optimism among analysts regarding the company’s future prospects.