Even though General Electric (Ge stock) third-quarter profits had some one-time costs and lower financial projections, Wall Street is still not worried. The price estimates that the analysts have set for the company are being raised.
On Tuesday, General Electric (NYSE:GE) posted earnings of 35 cents per share, but Wall Street was expecting earnings of closer to 45 cents per share. The 35-cent result, however, included a charge for warranties on wind turbines that totaled around 40 cents per share. This brought the total to 35 cents.
GE Stock Price Projection
That penalty was also accounted for in management’s projections of future profits. GE had projected full-year earnings to be in the range of $2.80 to $3.50 per share, but on Tuesday, the company revised its forecast to a range that falls between $2.40 and $2.80 per share. When the warranty charge is taken out of the equation, the midpoint of the projection range dropped from $3.15 per share to $2.60 per share, yet, it still decreased by 15 cents, going from $3.15 to $3.
As a direct consequence of this news, GE stock declined 0.5% on Tuesday, while the S&P 500 jumped 1.6% and the Dow Jones Industrial Average increased 1.1%. Because the stock’s performance was slightly below expectations, it is possible that some investors were left feeling somewhat dissatisfied. Wall Street did not participate.
Deane Dray, an analyst at RBC, has increased his price objective for GE shares to $93 from $81. He stated that the quarter was “largely as expected” after excluding the charge, and he added in a report that was released on Tuesday that “We still see appealing potential from a [breakup] viewpoint.”
The conglomerate known as General Electric will soon be divided into three distinct businesses: one will focus on aviation, another on power production, and the third on healthcare. In the first week of 2023, investors are scheduled to get GE HealthCare as a separate entity.
Dray recommends purchasing shares. The price objective that Citi analyst Andrew Kaplowitz has set for the company has been raised from $80 to $87 per share.
Kaplowitz wrote on Wednesday that the challenges in the renewable energy market, which includes wind turbines, have been acknowledged by investors for a long time. Thus, the warranty charge did not come as a surprise to anyone. He maintains his optimistic outlook on the separation, as well as on the capacity of the three firms to enhance their operating results in the upcoming quarters.
According to Scott Davis, an analyst at Melius, some of that improvement will have to come from within GE HealthCare. This division’s operating profit margins were around 15%, which fell short of the division’s long-term aim of 20%. The analyst believes that the management of HealthCare will need to provide evidence to investors that things will improve before the stock can be considered appealing to investors once the spinoff has been successfully completed.
On December 8th, the management of GE HealthCare will attempt to achieve exactly that. They will be holding a day for investors and analysts.
Davis has not modified his prediction on the price, but his target price of $110 per share is currently one of the highest on Wall Street. He recommends purchasing shares.
Featured Image- Megapixl @ Jetcityimage
Author Valerie Remorosa 
