On Tuesday, September 19, in midday trade, General Electric Company (NYSE:$GE) shares dropped 1.4%. Why? The decline started after Stephen Tusa, a J.P. Morgan analyst, echoed his bearish view on the Boston-based industrial conglomerate.
Tusa suggested that just because General Electric’s stock continues to get cheaper does not mean that it is attractive. He has kept his rating at underweight – Tusa has had this rating on the stock since May of last year – and his stock price target at $22, which is 8.8% below current levels. Tusa said that as the GE stock’s weakness continues, both investors and analysts seem to be trying to create a bullish narrative, based on how far the stock has fallen and under performed its peers and the market. However, analysts have been careful not to increase their ratings.
In a note to clients, Tusa wrote: “We believe this defines sentiment on the stock, which is somewhere between somewhat negative, and what we would characterize as ‘chicken bullish,’ with a common theme [that] it’s not that bad, understandable in the context of a sector that typically mean reverts.” He added, “This is essentially a denial that fundamentals could be this bad, and there is nothing that simple cost saves can’t take care of, something that was not obvious to the previous 15 years of management.”
So far this year, General Electric’s stock has plunged 24%.
Featured Image: depositphotos/creisinger
