- General Electric (NYSE:GE) -0.8% premarket as Cowen reiterates its Market Perform rating for the stock and cuts its price target to $12 from $15, predicting the company will report Q1 earnings below expectations.
- Cowen's Gautam Khanna estimates GE will report Q1 EPS ex-restructuring and pension expenses of $0.08 vs. the Wall Street consensus of $0.12.
- "We expect the upcoming accounting restatement and Q1 print to continue to pressure this 'show me' stock," Khanna writes, adding "we don't believe the $0.48/year dividend is safe unless 'contract assets' convert to cash on a net basis, and/or the Power market rebounds sharply and soon."
- GE announced last week that it would restate its results for 2016 and 2017 to reflect a new accounting standard, "in theory... a benign event , but it may be a negative if it raises GE's cost to borrow," according to Khanna. "GE will remain reliant on short term credit markets in 2018, which makes the restatement, and any related borrowing cost impact, worthy of monitoring."
- Now read: General Electric Capitulates On Friday - Sets Up Possible Swing Trade
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