Oppenheimer Upgrades General Electric: 'Turnaround Gaining Traction'

General Electric Company GE shares gained 5.8% on Tuesday after the company landed an upgrade on Wall Street.

The GE Analyst: Oppenheimer analyst Christopher Glynn upgraded GE from Perform to Outperform and set a $12 price target.

The GE Thesis: Glynn said GE’s net debt is down by $13.3 million year-to-date to $34.6 billion following its BioPharma sale. At the same time, its cash balance is up by $6.7 billion to $24.3 billion.

At the same time GE’s balance sheet has improved, Glynn said the company is making steady progress on its turnaround efforts. Oppenheimer is forecasting 60 cents of interim free cash flow per share and 50 cents of EPS by 2022.

Given GE’s asset sales, facility consolidations, working capital management, extended debt structure and liquidity flexibility, Glynn said the company appears to be well-positioned to emerge from the aviation downturn a much healthier company.

“GE continues to emphasize a long game of inches, but we also believe the pace of manifest improvements picking up, as lean becomes culturally reinforcing and Culp's turnaround gaining traction,” Glynn wrote in the note.

Related Link: Why A COVID-19 Vaccine Makes General Electric's Stock 'More Investable'

The Oppenheimer upgrade comes after Bank of America analyst Andrew Obin said positive coronavirus vaccine data is extremely bullish for GE. Bank of America is targeting 34 cents of EPS in 2021 and $4.7 billion in free cash flow for GE in 2022.

Benzinga’s Take: GE investors are likely growing tired of hearing about how a turnaround is just around the corner after years of underperformance and lackluster cash flow and earnings numbers, and the stock remains a show-me story at this point. However, a coronavirus vaccine would go a long way in eliminating the biggest near-term headwind to GE’s turnaround story.

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