Nomura Securities reported on Monday that it has downgraded diversified industrial/tech giant company, General Electric Company (GE).
The firm has lowered its rating on GE from a “Buy” to “Neutral,” and has given the company a $24 price target. This price target suggests that the stock remain flat at at its current price of $23.52. Analysts have downgraded the stock based on their belief that the stock has already seen its positive.
An analyst from the firm commented, “GE has made key positive steps in the last few years and sentiment has turned more positive. We applaud these positives, but we think they are now reflected in the valuation adjusting for accounting differences. The P/E (adjusted for accounting differences) is now in line with premier industrial peers despite GE still getting 40-45% of its earnings from GE Capital. On a comparable GAAP pension basis, we estimate GE’s 2013 P/E is 15.7x, which is a slight premium to peers EMR, UTX, and MMM. Given the 40-45% of GE’s earnings still coming from GE Capital, this implies GE’s industrial earnings are already being awarded a premium P/E. GE has made a lot of progress in the last few years, and we think portfolio moves such as these could be important next steps. At this stage we think a lot of the good news is priced into the stock, and we see more potential for outperformance elsewhere in our sector.”
Looking ahead, the firm expects to see FY2013 earnings of $1.70 per share and FY2014 earnings of $1.87 per share.
General Electric shares were down 26 cents, or -1.07% during Monday morning trading. The stock has increased 23% in the past year.
The Bottom Line
Shares of General Electric Company (GE) have a 3.22% yield, based on Monday morning’s price of $23.59.
General Electric Company (GE) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.