Banking on General Electric (GE)

Bernstein raised General Electric Co. to ‘Outperform’ from a less optimistic ‘Market Perform’ rating.  The old price target was $19.00, still indicating about 16% upside as of yesterdays close.  The new target has been raised to $21.00 per share.  This puts the new upside of about 28.5%.

If you include General Electric’s 3.7% dividend, the new call implies more than 30% upside.  For a comparison, the consensus price target objective before adjusting for this upgrade was $20.93 for General Electric.

The research note is in agreement with us over one thing for sure: a higher dividend for 2012.  Their call is that the dividend could rise to 4% in 2012 after a review from the Fed. Part of the reason is obvious in stronger core metrics, but Bernstein also cited free cash flow and a likely stronger earnings power in key businesses.

GE’s value has been hard to argue against as far as “Value Stocks” are concerned at under 12-times earnings and under 11-times next year’s earnings.  Shares are up 2.3% at $16.71 on normal trading volume today.

JON C. OGG