Why Deutsche Bank Issued the Most Negative GE Call on All of Wall Street

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General Electric Co. (NYSE: GE) was weighing on the Dow Jones Industrial Average on Friday, more in a theme rather than a direct impact. Deutsche Bank downgraded GE to Sell from an already cautious Hold rating. What matters here is that the firm’s $24 price target is now the lowest analyst target on Wall Street.

The theme for this downgrade should stand out as more than negative. It’s harsh. The theme is that GE is overvalued, has weak earnings metrics, a larger disparity between GAAP and non-GAAP earnings than peers, higher underfunded pension obligations ahead, and more.

Investors need to pay attention here that GE is close to hitting 52-week lows while the stock market has been within about 1% of all-time highs.

If Deutsche Bank’s call from John Inch is right, some investors might question whether GE can actually sustain its dividend. The report noted that the company does not appear to be generating sufficient cash flow, on an ex-divestitures and GE Capital dividend basis, to sustain operations. Inch also pointed out that there are positive hopes for leadership changes ahead, but new leadership may reset earnings targets closer to GE’s actual cash generation.

As mentioned, Inch’s price target for Deutsche Bank is down at $24. This would represent far worse than a new 52-week low if Inch is right in his call. While this was already noted as the lowest of all current analyst targets, it is a full three dollars lower than the prior $27 low target from analysts.

Investors have been wary of GE in 2017. The Dow was up about 6% so far this year, but GE’s stock was down about 8%.

The Deutsche Bank call was already negative ahead of this downgrade. Back in April, Inch reiterated his Hold rating on GE, but even then he talked about the rating weakness due to valuation, weak cash flows and a lack of leverage to a short-cycle industrial economy rebound.

Thomson Reuters has earnings estimates at $1.63 per share for 2017, $1.89 for 2018, $2.12 for 2019 and $2.50 for 2020. These consensus estimates create forward valuations of 17.4 times this year’s earnings estimates, 14.9 times expected 2018 earnings and 13.3 times expected 2019 earnings.

GE shares closed up 0.6% at $28.87 on Thursday but were indicated down 1.5% at $28.44 in Friday’s premarket trading session. After almost an hour of trading on Friday morning, GE shares were trading down 2.4% at $28.16, a new 52-week low, and its dividend yield is now over 3.4%.

The 52-week high is $33.00, and the consensus target price from the Thomson Reuters sell-side analyst universe was up at $32.57 prior to this call.