UBS A.G. (NYSE: UBS) made a change on its Key Call list, which resulted in lower earnings expectations and the removal of General Electric Co. (NYSE: GE) today. Weaker-than-expected near-term earnings growth in an uncertain macro environment was cited as the reason for the removal. The Key Call list is a collection of UBS analysts “highest conviction” calls.

The earnings per share estimate for 2013 was reduced from $1.70 to $1.63, a figure that represents 15 times revised 2013 earnings. While maintaining the Buy rating and $24 per share target, UBS cited several reasons for the removal:

• Higher anticipated restructuring expenses
• Lower earnings growth at GE Capital, driven by large reductions in the size of their portfolio
• Incremental headwinds for the Health Care, Appliances and some Finance end markets

UBS also noted in their report that the Industrial unit’s margin expansion for 2012 fell short due to several mix issues and that investors will be closely watching for the 70+ bp margin improvement targeted by General Electric for 2013.

The earnings split between Industrial and Financial will also be a closely watched metric next year. GE is targeting 65% earnings from Industrial in 2015, versus 55% today. While investors are anxious to see the mix move in that direction, it may indicate lower earnings per share growth over the next few years than current consensus estimates.

Lee Jackson

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