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
TheStreet Open House

Stop Buying General Electric: JPMorgan (Update 1)

Updated from 8:50 a.m. ET with morning market action and comment from Nomura analyst Shannon O'Callaghan.

NEW YORK ( TheStreet) -- The fallout has begun, following the revenue declines reported by General Electric (GE) on Friday.

JPMorgan Chase analyst Stephen Tusa on Monday downgraded GE to a neutral rating, after his firm had recommended the shares with a "buy" rating for three years, saying in a note to clients that "the stock is dead money near term." The analyst lowered his price target for the shares to $22 from $24, while lowering his 2013 earnings estimate for the company by a penny to $1.64, and lowering his 2014 EPS estimate by 2 cents to $1.78.


General Electric's shares declined 4% on Friday to close at $21.75, after the company beat the consensus EPS estimates for first-quarter earnings and revenue, but disappointed investors by announcing a significant year-over-year revenue decline.

GE's total industrial revenue for the first quarter was $34.209 billion, declining 6% from a year earlier. The most affected segment was Power & Water, with first-quarter revenue declining to $4.825 billion from $6.551 billion in the first quarter of 2012. The company had expected to see lower gas and wind turbine orders, but the numbers were still striking.

GE Chief Financial Officer Keith Sherin said during the company's earnings call on Friday that GE received eight gas turbine orders during the first quarter, down from 23 a year earlier, while wind turbine orders declined to 584 in the first quarter from 696 in the first quarter of 2012.

GE CEO Jeff Immelt said during the call that overall industrial orders during the first quarter were up 3% from a year earlier. "Equipment orders were up 10% and we had a 1.3 times book-to-bill ratio in the quarter," he said. "This gives us confidence in our delivery schedule for the second half and beyond."

Immelt also said "margins were negatively impacted by some of the revenue shortfalls in Europe in Power & Water, but we remain on track to deliver the 70 basis points margin expansion this year and we will show you more details later in the deck."


GE's industrial margin for the first quarter was 12.9%, declining 70 basis points from a year earlier, "but up 40 basis points excluding the Power & Water cycle," according to Immelt.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs