General Electric enters the new year with a monster rally
- General Electric rallied as much as 8% to $8.18 a share on Wednesday, outperforming the broader market on the first trading day of 2019.
- The iconic industrial giant had a tough year in 2018, shedding lost more than half its value.
- The JPMorgan analyst Stephen Tusa, a long-term bear on General Electric, gave a rare upgrade on the stock's rating in December.
- Watch General Electric trade live.
General Electric rallied as much as 8% to $8.18 a share Wednesday as it looks to put a tough 2018 in the rear-view mirror. If Wednesday's gain held up for the entire year, it would be the best annual performance for shares since 2015, when they gained more than 23%.
In 2018, GE's stock lost more than half of its value as its power business struggled, price-cost pressures were compounded by the US-China trade war, and its LEAP engine suffered through behind-schedule deliveries.
On October 1, the company appointed Larry Culp as its new CEO to navigate it through its turnaround. But the first quarterly results under the new management underwhelmed. The conglomerate missed Wall Street estimates on both the top and bottom lines and slashed its dividend to a penny.
To increase investor confidence, GE's management sped up efforts to reduce debt by selling assets. In November, GE announced plans to expedite efforts to sell a $4 billion stake in the oil-field-services provider Baker Hughes. Additionally, its finance arm, GE Capital, sold a $1.5 billion healthcare equipment finance portfolio to the US lender TIAA Bank.
And last month, General Electric said its digital unit would sell a majority stake in ServiceMax, a software provider, to the technology-focused private-equity firm Silver Lake.
GE's efforts to free up cash have been appreciated by JPMorgan analyst Stephen Tusa, a long-term bear. On December 13, Tusa raised his rating to "neutral" from "underweight," a view he had held since May 2016 when the stock was above $30.
"Key to the story, in our view, is the outcome of 'known unknowns' in near term, which are better understood and around which debate is more balanced, as opposed to being overlooked by most bulls in the past," Tusa said.
Now read:
- GE slashes its dividend to a penny, says the SEC and the DOJ are investigating its power-business charge
- General Electric's new CEO should 'put a floor in the stock,' RBC says
