Wednesday, March 17, 2010

More on JP Morgan's General Electric Comments (GE)

From The via the Globe and Mail:
GE rallies on analyst call, CFO comments

JPMorgan analyst Stephen Tusa, who has an overweight rating and $22 price target on the shares, lifted his earnings estimates for GE, citing a belief that credit losses at the company are peaking and should be in decline by mid-2010. He thinks GE now has the "potential" to beat analyst estimates for the first time in a decade.

"We believe that, for the first time in over 10 years, the pieces are in place for earnings upside, a key to moving GE from value to momentum," Mr. Tusa said in a research note to clients....

...JPMorgan's Mr. Tusa lifted 2010 estimate for General Electric's earnings by 8 cents to $1 per share, while upping his 2011 estimate by 15 cents to $1.30 a share. Looking out to 2012, he forecasts earnings of $1.62. Mr. Tusa sees the potential for General Electric to beat the current consensus Street estimate for 2011.

He writes that GE has missed analyst expectations two years out every year since 2000. Tusa estimates GE will earn $1.30 per share in 2011 versus consensus estimates of $1.20. Losses are peaking at GE Capital and should begin to drop in the second half of this year, the report argues.

Mr. Tusa finds reasons for bullishness in comments during the company's presentation related to fourth-quarter results that "capital finance is positioned for upside." He also cites the annual shareholders letter from Chairman and CEO Jeff Immelt, published last week, "in which GE believes that non-earning assets have peaked," according to Tusa's summary of the letter.

Mr. Tusa is also optimistic on General Electric's aviation business, noting increasing air traffic and an improved outlook for the airline industry. Among the obstacles for General Electric, Mr. Tusa sees a rising tax rate for GE Capital. While the financial unit got a tax credit of 14 cents per share in 2009, he sees charges of 13 cents a share and 27 cents a share in 2010 and 2011, respectively....MORE

Go to the home page and scroll down, we have a few more GE posts that may be of interest.