General Electric Stock Soar 24% in a Month, Here’s Why
General Electric stock price rose 24% in the last month alone as investors sentiments are turning positive for the industrial conglomerates amid prospects for free cash flow generation.
The improving fundamentals for industrial activities have been adding to investor’s sentiments.
GE is among the biggest losers as virus spread has devastated demand for its aviation and industrial businesses. Its shares remained under massive pressure throughout the second and third quarters. Despite the bearish performance, General Electric stock bounced back sharply in the past few weeks on hopes of improving business trends.
Price Target Hikes Supported General Electric Stock
The market analysts have started showing confidence in GE shares after the company hinted that they are in a position to generate positive free cash flows for the second half of the year.
For instance, UBS analyst Markus Mittermaier has provided a buy rating with a stock price target of $9. GE shares are currently trading around $7. The analyst said recent comments from GE management regarding the second-half free cash flow have enhanced confidence in future fundamentals.
The analysts say he expects second-half cash flows in the range of $2.5 billion, compared to the consensus estimate for $1.75 billion.
Moreover, the prospects for the coronavirus vaccine is adding to investor’s sentiments. This is because its aviation business saw a substantial revenue drop due to the restrictions on air traveling.
Third Quarter Earnings Could Boost sentiments
The market investors are optimistic that GE will perform better in the days ahead. The third-quarter results would also highlight the improving trend in investor’s views.
General Electric is scheduled to report third-quarter earnings on Oct. 28. The analysts’ consensus revenue estimate is around $18.72 billion while loss per share is expected to trim to 4 cents from $0.15 per share in the year-ago period. The industrial free cash flows are likely to remain positive for the third quarter.