General Electric shares gain the most in five weeks on Thursday, UBS assigns “Buy” rating on the stock, expects rebound next year

A new analyst at UBS assigned a “Buy” rating on General Electric Company (GE), as he expected “the stock narrative to change from significant cash drag to successful transformation.”

The new rating is an upgrade from “Neutral”, which was assigned by previous analyst.

UBS also raised its 12-month price target on the stock from $11.50 to $14.

General Electric shares closed higher for the third time in the past ten trading sessions in New York on Thursday. It has also been the sharpest daily surge since November 4th. The stock went up 4.28% ($0.47) to $11.44, after touching an intraday high at $11.56, or a price level not seen since November 26th ($11.67).

Shares of General Electric Company have risen 57.21% so far in 2019 compared with a 26.40% gain for the benchmark index, S&P 500 (SPX).

In 2018, General Electric’s stock went down 56.62%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

“We question the depth of which consensus captures the ongoing GE evolution,” UBS analyst Markus Mittermaier wrote in a client note, cited by CNBC.

“Analyzing GE is not trivial and requires a detailed segment level analysis. This is what we have done. Our view is based on a multitude of proprietary data,” he added.

The analyst expects GE’s earnings to grow by 12% and 29% in 2020 and 2021 respectively. Meanwhile, the company’s industrial free cash flow is expected to triple to nearly $2.3 billion in 2020, driven by its aviation and healthcare businesses.

Analyst stock price forecast and recommendation

According to CNN Money, the 16 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $12.00, with a high estimate of $21.00 and a low estimate of $5.00. The median estimate represents a 4.90% upside compared to the closing price of $11.44 on December 12th.

The same media also reported that at least 10 out of 21 surveyed investment analysts had rated General Electric’s stock as “Buy”, while 9 – as “Hold”. On the other hand, 2 analysts had recommended selling the stock.