This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

2012 Could Be GE's Year: Analyst (Update 1)

Updated to include information from William Blair analyst.

NEW YORK ( TheStreet) -- Next year looks promising for General Electric (GE - Get Report), according to Barclays Capital analyst Scott Davis, who said in a report that 2012 might be "the first year in a long time that GE Industrials outgrows its core peer group."

Danaher (DHR - Get Report) recently provided guidance of between 2% and 5% core growth in 2012, which in the best-case scenario for both companies is half of General Electric's guidance of 5% to 10%, Davis said. Honeywell (HON - Get Report) issued its guidance Thursday, which Davis expected to be between 4% and 5%. 3M (MMM - Get Report) issued core growth guidance of less than 5%, Davis added.

The rosy outlook for GE's industrial division comes from the anticipation that areas such as power generation, aerospace and health care become some of the best end markets that industrial companies will sell into in 2012.

Davis said he anticipates record U.S. wind volumes in 2012 as the production tax credit for renewable energy is set to expire in 2013. Another strong area for General Electric next year will likely be transportation, Davis said.

"GE expects that transportation should see the highest level of margin expansion among industrial businesses in 2012," Davis wrote.

Davis noted that if the Fairfield, Conn.-based multinational company can be restrained with its mergers and acquisitions and "restarts a new era of shareholder value creation and kept promises," 2012 might be a strong year for General Electric.

Davis maintained his overweight rating on General Electric.

General Electric shares are down 8.2% so far in 2011. The stock closed Thursday at $16.79.

While Davis might be bullish on General Electric's 2012 outlook, others are not. The multinational made The Street's "5 Stocks Fund Managers Hate for 2012" as $20.7 billion of the stock was dumped from institutional portfolios in the fourth quarter.

General Electric's financial services arm is also a concern as it makes up about 25% of the company's bottom line. A tough economy could hurt the unit's earnings.

And though William Blair analyst Nick Heymann also noted that General Electric's industrial division will likely grow in line or slightly outpace its competitors, he thinks 3M could catch up after the first quarter of next year. That's when 3M's electronic, electrical and communications segment will experience an inventory adjustment that could provide a 3% boost to the company's overall sales, Heymann said.

How do you think General Electric will perform in 2012? Share your thoughts in the comment section.

-- Written by Alexandra Zendrian in New York.

>To contact the writer of this article, click here: Alexandra Zendrian

>To submit a news tip, send an email to: tips@thestreet.com.

>To follow the writer on Twitter, go to Alexandra Zendrian.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DHR $91.76 0.00%
GE $25.90 0.00%
HON $104.62 0.00%
MMM $150.40 0.00%
AAPL $114.64 0.00%

Markets

Chart of I:DJI
DOW 17,550.69 -47.51 -0.27%
S&P 500 2,093.32 -4.72 -0.22%
NASDAQ 5,105.5460 -9.8360 -0.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs