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General Electric Shares Extend Gains After Morgan Stanley Price Target Boost

Morgan Stanley analyst Jashua Pokrzywinsk sees GE's March 10 investor day an "an important catalyst and starting point for free cash flow over next several years".

General Electric  (GE)  shares extended gains Thursday after analysts at Morgan Stanley boosted their price target on the stock ahead of its investor day event set for next week. 

Morgan Stanley analyst Joshua Pokrzywinski lifted his price target on GE by $4, to $17 per share -- well ahead of the Wall Street average of around $12.30 -- while maintaining his overweight rating on the industrial group as GE prepares for its March 10 investor day presentation. 

Pokrzywinski argues the event will provide "an important catalyst and starting point for free cash flow over next several years", a key metric for the stock's near-term progress. He also sees a return to normal profits for GE's aviation division, which has been hit hard by the impact of COVID 19, in 2023, a year which he describes as a 'starting point' for sustainable earnings growth thereafter.

General Electric shares were marked 3.5% higher in early trading Thursday, against a 0.4% gain for the S&P 500, to change hands at $13.90 each and extend their year-to-date gain to around 33%.

GE shares surged more than 3.5% Wednesday, well ahead of the S&P 500, after analysts at UBS bumped t their price target on the group to $15, citing changes to the COVID relief bill that could potentially reduce GE's unfunded pension liability.

UBS analyst Markus Mittermaier also noted that every 0.25 percentage point increase in the discount raised used to value future payments reduces pension obligations by about $2.4 billion, a significant factor in the current climate of rising government bond yields and surging inflation expectations.

GE said in late December that it has pre-funded $2.5 billion in minimum pension payments for the next three years and repaid a $1.5 billion loan to GE Capital.

GE posted weaker-than-expected fourth quarter earnings in late January forecast solid industrial free cash flows of  between $2.5 billion and $4.5 billion and adjusted profits in the region of 15 cents to 25 cents per share.