- Longtime General Electric (GE -0.5%) bear Stephen Tusa reiterates his Underperform rating on the stock, warning about an "underappreciated risk" at GE Capital and saying GE will still need to raise more capital.
- Far from the final shoe to drop, the J.P. Morgan analyst sees GE's massive $15B insurance charge at the start of this year as a "wake-up call" for GE Capital, which he says is operating with the "burden of a systemic approach to making short-term earnings look better with ultimately uneconomic long-term moves."
- Tusa says GE's income statement shows a lack of portfolio revenue to cover fixed costs, with a particular concern that interest rates on the debt have increased in the past year, cramping GE's ability to grow organically; to get to ratings agencies’ targets, he sees either a $22B incremental asset wind-down vs. the standing plan or a $3B capital contribution.
- Now read: Rail Business Gone, But GE Still Not On Track
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