General Electric's financial arm, known as GECS, "has moved from a drag with capital adequacy concerns to a cash 'gusher,' which we believe is being underappreciated in the sum-of-the-parts discussion at GE," Tusa wrote. The analyst kept his "overweight" rating on the stock while lifting his price target to $21 from $20. General Electric shares closed Thursday at $19.01 and were rising in pre-market trading Friday.
GECS "is not just another big bank, and neither is GE," Tusa contends. In making his case, he cites "minimal exposure to headwinds from U.S. mortgage, no capital market operations, a solid 3.5% dividend yield," as well as an acceleration earnings for the industrial side of the company.
Tusa believes GECS could pay out $27 billion in dividends to the parent company from 2013 to 2015, including special dividends and regular payments from the unit. Tusa has had an "overweight" rating on GE since September 2009, when the shares were below $14.-- Written by Dan Freed in New York. Follow this writer on Twitter.