I’ve been a bear on General Electric Company (NYSE:GE) for several months now. It’s an easy stance to take given the company’s restructuring and reorganizing efforts. However, even I think this recent selloff has been more than a bit overdone. What’s more, earnings are coming up, and all it will take is a bit of positive news to send the stock skipping higher once again.
GE will step onto the earnings stage next Friday ahead of the market open. Wall Street is currently expecting GE to post a profit of 50 cents per share, up sharply from earnings of 32 cents in the same quarter last year. Revenue is expected to rise 11.5% to $32.62 billion.
Still, expectations appear to be a bit higher within the analyst community, despite the recent spate of bearish headlines. According to EarningsWhispers.com, General Electric’s whisper number arrives two cents higher at 52 cents per share. Matching the whisper could be a significant bullish spark for a beaten down GE stock price.
Expectations begin to fade from here. For instance, only nine of the 16 analysts following GE stock rate the shares a “buy” or better. The 12-month price target of $27.93, meanwhile, rests a hefty 21% north of GE’s current perch following the stock’s recent plunge. Whether this results in downgrades or price-target cuts remains to be seen, but most analysts are likely waiting on next week’s quarterly earnings report to make a final decision.
Click to Enlarge Whether this results in downgrades or price-target cuts remains to be seen, but most analysts are likely waiting on next week’s quarterly earnings report to make a final decision.
On the bearish end of the spectrum are GE options traders. Currently, the October put/call open interest ratio rests at a lofty reading of 1.18, with puts outnumbering calls among options most affected by next week’s earnings report.
(Note: October options expire the same day that GE reports earnings.)
October implieds are currently pricing in a post-earnings move of about 3.78%. This places the upper bound at $23.87, with the lower bound coming in near $22.13.