Deutsche Bank Has A Few Questions About GE's Surprise CEO Announcement

General Electric Company GE CEO Jeff Immelt will resign effective August 1. The reigns will be handed to John Flannery.

Immelt will remain as the company’s chairman through the end of the year.

Deutsche Bank analyst John Inch is confident that Flannery is qualified to lead the company, and noted he wasn't surprised by much of what else was said on GE’s Monday morning conference call with investors, such as the promotion of Jeff Bornstein to Vice Chair and reiterated 2017 adjusted earnings estimates.

The analyst maintains a Sell rating and $24 price target on the stock.

What Went Unsaid

While Inch expected much of what was said on the call, it was what wasn't addressed that left him questioning the move.

For instance, the review Flannery will conduct of GE’s portfolio was not detailed to say whether it will be conducted with a third party’s assistance or include the possibility of a transition to GAAP EPS.

The timing of the announcement also led Inch to question whether the company’s fundamentals are in worse shape than expected.

GE is still in the midst of one of its largest deals ever, the acquisition of Baker Hughes BHI. Inch noted that the deal “already looks to be coming up short on its numbers.”

“Ultimately, this is all likely to come down to the numbers rather than hype (or hope) around the portfolio. In this regard, we believe there to be ongoing significant prospects for a sizeable revision lower,” said Inch.

GE shares rose sharply on Monday, and sitting at about $29 near the close.

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