Should I invest in General Electric shares after Goldman Sachs raised its price target to $15?

Written by: Stanko Iliev
February 22, 2021
  • General Electric shares have advanced more than 11% since the beginning of January
  • Goldman Sachs raised its 12-month price target on GE to $15
  • The business of the company remains under the pressure

General Electric (NYSE: GE) shares have advanced more than 11% since the beginning of January, and the current share price stands around $12.50. Goldman Sachs announced this Monday that it sees another 25% upside for General Electric and raised its 12-month price target on the stock to $15.

Fundamental analysis: Goldman Sachs raised its 12-month price target on GE to $15

General Electric (GE) is an American company that operates through the following segments: healthcare, power, aviation, renewable energy, digital industry, additive manufacturing, and finance. General Electric shares have advanced due to promising COVID-19 vaccines, and according to the latest news, Goldman Sachs expects another 25% upside for General Electric shares.

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Goldman Sachs raised its 12-month price target on GE to $15 and expects that General electric will beat expectations for Q1. As more people get vaccinated, economic activities will start to recover, and the aviation segment is expected to benefit once the economy reopens.

“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.

Despite this,  the company expects to see negative cash flow in the current quarter, but Q1 results should be better than the year-ago period. CEO Larry Culp said last week that the first three months of the year tend to be the company’s “softest” quarter, but General Electric has improved its cash flow by cutting overhead costs and jobs.

The aviation workforce was cut by 23%, healthcare by 16%, power by 10.5%, and renewable energy by 7%. “We continue to monitor the economic environment closely and expect to undertake further restructuring actions to more closely align our cost structure with earnings goals,” General Electric reported in the 10-K.

General Electric reported Q4 results in January; total revenue has decreased by 16.5% Y/Y to $21.9B while Q4 GAAP EPS was $0.27 (beats by $0.25). The power and renewable energy segment fell 3% in Q4, healthcare revenue fell 11%, while the aviation segment revenue fell 35%.

General Electric’s size will always attract potential investors, but the company’s business still remains under pressure.

Technical analysis: Bulls are in control of the price action

General Electric shares have advanced from $6.11 to $12.70 since the beginning of October, and the current price stands around $12.5. Technically looking, shares of this company could advance even more, but maybe now is not the best moment to invest in General Electric shares.

Data source: tradingview.com

The current support levels are $12, $11, and $10, $13, and $15, represent the important resistance levels. If the price jumps above $13 resistance, it would be a signal to trade shares, and the next target could be around $14.

Rising above $15 supports the continuation of the bullish trend for General Electric shares, but if the price falls below $10, it would be a strong “sell” signal.

Summary

General Electric shares have advanced more than 11% since the beginning of January, and Goldman Sachs announced this Monday that it expects another 25% upside for this stock. Goldman Sachs raised its 12-month price target on General Electric to $15, but the company’s business remains under pressure.