J.P. Morgan’s (JPM) Warning Makes GE Slump
J.P. Morgan analyst Stephen Tusa downgraded GE's stock price target to $6 from $10 and said that the industrial conglomerate’s recent earnings were worse than expected on almost all fronts. GE’s shares plummeted by ~10% in Friday’s trading session, putting GE on track for the company’s worst one-day decline since March 2009.
With the decline's from last week, GE is headed towards its lowest close since March 2009, while bringing the losses for the company to around 40% over the past mont. Falling short of earnings expectations and a ratings downgrade from all three main credit-rating firms have brought the onslaught.
Liquidity was also a major concern for the JPM analyst, who said that even after cutting the dividend by ~95% the company had zero enterprise free cash flow to pay off its liabilities worth billions. He further added that while the stock is down ~70% from the peak of $30, this move still does not sufficiently reflect the fundamental facts.
In response to the analyst’s warning, GE responded with a statement insisting that it remains a “fundamentally strong company” with a sound liquidity position. The company further added that it is taking the necessary aggressive measures to strengthen its balance sheet through accelerated deleveraging and by restructuring efforts.
The question is, does the market have any confidence left in GE?
