Shares of General Electric (GE 7.42, +0.71, +10.54%) jumped 12.7% in
pre-market after JPMorgan Chase upgraded the stock to “Neutral” from “Underweight.”
The upgrade caught the attention of the market, considering that the JPMorgan Chase analyst responsible for the call has been bearish on the stock since early 2016, when GE traded near $30 per share.
Today's upgrade is owed to a view that General Electric has taken material steps toward improving its financial position and that the company is now facing a smaller array of potential negatives. However, despite the upgrade, JPMorgan Chase has maintained a $6 price target on the name, adding that it is still likely that GE will need to raise equity.
General Electric has been trapped in an aggressive downtrend since the start of 2017, but the stock is now trying to stay above its 2009 low, which was notched at $5.73. An improved rating from a Tier 1 firm is boosting shares today, but investors will still need to see evidence of improving operations in the form of stronger quarterly earnings. Without improvements on the financial front, today's advance could prove to be nothing more than a short-covering rally before the stock takes the next leg lower.
Aware that it needs to improve operating performance, GE announced today the establishment of a new, independent company focused on building a comprehensive portfolio of Industrial Internet of Things software. This business will be wholly-owned by GE, but it will have its own brand and equity structure as well as an independent Board of Directors. The new company will start with $1.2 bln in annual software revenue and an existing base of industrial customers around the globe.
- OUR VIEW
- LEARNING CENTER