Goldman Sachs: General Electric stock could climb by 24%

on Jun 29, 2021
  • Goldman Sachs reiterates its ‘buy’ rating on GE with a price target of $16.
  • The investment bank added General Electric to its list of “top large cap ideas”.
  • Stephanie Link discusses Goldman Sachs' call on CNBC's "Halftime Report".

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General Electric Company (NYSE: GE) opened about 2% up in the stock market on Tuesday as Goldman Sachs said it was the best industrial stock that will benefit from the reopening. The investment bank also added GE to its list of “top large cap ideas”.  

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Goldman Sachs has a price target of $16 on GE

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Goldman Sachs reiterated its ‘buy’ rating on General Electric with a price target of $16 per share that translates to an about 24% upside potential. In the back half of 2021, it expects the American multinational to raise its industrial free cash flow to close to $4.5 billion. Goldman Sachs is positive that a sharp recovery in renewable energy and aerospace will add resilience to the stock.

In a client note, the financial services firm said on Tuesday:

“We view the next chapter for GE, beyond our $16 price target, as being driven by +(double-digit) FCF margins (or $1/sh in FCF), which would imply a $20+ valuation. Lastly, GE is the most rate sensitive stock in our coverage, and the GS Econ view is for rates to rise to 1.9% by year-end.” 

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General Electric is scheduled for its announced one-for-eight reverse stock split on 30th July. Commenting on Goldman’s call on CNBC’s “Halftime Report”, Hightower portfolio manager Stephanie Link said:

“GE’s CEO is turning the ship and changing the culture. He’s shrinking the company to grow and be more nimble, focusing on what they do really well, which has always been aerospace and healthcare. They’ve been making some tuck-in acquisitions as well. In the next several years, the free cash flow could get to $7 billion. So, I’m still on board and I will stay on board.”

Stephanie also explained in the same interview why she’s overweight industrials. On a year-to-date basis, General Electric, which is set to publish its Q2 results on 27th July, is currently up about 25%.


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