In a report published Wednesday, Morgan Stanley analysts maintained an Equal-Weight rating on General Electric Co. GE, with a price target of $27.
In the report, Morgan Stanley noted, "We have tweaked our GE model following the normal post-K maintenance review. Overall our estimates are unchanged, but the mix has altered somewhat. In a broad sense, a more conservative stab at our Oil & Gas assumptions was offset by lower corporate expenses."
"Following an updated review of latest CapEx outlooks, pricing commentary and peer company guidance, we now model Oil & Gas segment income to decline 15% in 2015 (vs guidance of flat to down single digits) and now embed a peak to trough decline of 29% through 2017," the analysts wrote.
Morgan Stanley added, "GE surprised us by aggressively lowering corporate expenses by $953m in 2014 to $2.4bn and has provided guidance for $2.3-2.5bn in 2015. We assume that corporate will continue to receive its fair share of restructuring and consistent with GE's 12% SG&A target, we see Corporate continuing to trend down towards the $2bn range by 2017."
"A major factor in driving segment margin expansion is the growth in Service profitability, which expanded by 2ppts to 32% on a revenue base of $46bn…While applauding Service performance, it does highlight continued pressure on Equipment profitability," the analysts commented, while adding, "Nevertheless OE margin levels are too low and this can be a key earnings lever, although our sense is that 2015 will echo 2014, in this regard."
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in