General Electric Co. will likely lose its 'AAA' credit rating and may also cut its dividend after that, an analyst at J.P. Morgan suggested on Friday, according to reports.
Analyst Stephen Tusa told clients in a note that the downgrade of the company's Standard & Poor's credit rating was "nearly a foregone conclusion," according to Reuters.
A diminished credit rating would increase the company's difficulty and cost in borrowing funds. Rating services Moody's Investors Service and Standard & Poor's are currently considering whether to lower the company's ratings.
Tusa cut his profit estimate for the current year to 85 cents instead of $1.20 and also lowered his price target to $9 from $13, according to Bloomberg. He predicted next year's profit will be 70 cents instead of $1.10
Yesterday chief executive Jeffrey Immelt said he was prepared to run the company even if it lost its rating.
"We're prepared to run the company as a double-A, we're prepared to run the company as a triple-A, but I'm not going to change the way we run the company one bit," Immelt said Thursday in New York, according to Bloomberg. "The rating agencies ultimately will decide."
About International Business Times
The International Business Times is composed of twelve high-growth online editions (ibtimes.com) that give readers local reports balanced with multinational perspectives. Exclusive and transparent insights from global markets make The International Business Times an indispensable news source for business-minded individuals.