Shares of General Electric (NYSE:GE) are down more than 10% today after the company reported earnings for the first quarter. Revenue came in at $17.04 billion, which beat analyst expectations of $16.85 billion by about one percent. Meanwhile, earnings per share (EPS) came in at 24 cents, which beat expectations of 18 cents by 33%. While revenue and earnings beat analyst estimates, free cash flow (FCF) is what’s sending GE stock down today. FCF for the quarter tallied in at -$880 million while analysts were expecting -$816.5 million.
GE Stock: General Electric Reports Q1 Earnings
General Electric also reiterated its plan to split into three separate companies by 2024. Then, the company will focus on aviation efforts while spinning off its healthcare and energy businesses as separate entities.
For guidance, the company expects full-year adjusted EPS to come in between $2.80 and $3.50. Meanwhile, GE estimates full-year FCF to be between $5.5 billion to $6.5 billion. However, the company warned earlier this year that supply chain challenges could persist into the second half of the year. GE cautioned that “the magnitude of these challenges likely present pressure to overall growth, profit and free cash flow through the first quarter and the first half, beyond typically expected seasonality.”
With that in mind, let’s take a look at how Wall Street analysts view General Electric going forward.
3 Analysts Weigh In on General Electric
- Goldman Sachs has a price target of $124. Analyst Joe Ritchie believes that GE should provide “greater granularity” on its structural working capital improvements. In addition, the analyst expects upside to the company’s 2022 operating income guidance of $6.5 billion. Ritchie calculated his price target by assigning GE stock with a 2023 FCF yield of 5.5%.
- Morgan Stanley has a price target of $120. Analyst Joshua Pokrzywinski sees GE as a “solid risk/reward” bet in the recovery of the commercial aerospace sector. Pokrzywinski’s $120 price target is “likely conservative,” factoring in a 2023 15X expected earnings before interest, taxes, deductions, and amortization (EBITDA) multiple on the company’s aviation and healthcare businesses.
- Cowen has a price target of $110. Analyst Gautam Khanna cautioned that “near-term results will be soft” due to supply chain issues and seasonality. However, the analyst believes that the stock’s decline provides a “more attractive risk-reward” scenario. For 2023, Khanna expects a FCF yield of 7%.
- Finally, General Electric has an average price target of $110.22 among 18 firms with coverage of the company.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
