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General Electric shares fall the most in two months on Friday as company pares free cash flow target, second-quarter earnings top estimates

Shares of General Electric Company (GE) retreated the most in two months on Friday, after the conglomerate pared its free cash flow target, which raised concerns over its full-year outlook. Still, the companys quarterly earnings per share dropped less than anticipated.

General Electric shares closed lower for a second consecutive trading session in New York on Friday. It has also been the steepest daily loss since May 23rd. The stock went down 4.44% ($0.61) to $13.12, after touching an intraday low at $12.98, or a price level not seen since June 25th ($12.74).

Shares of General Electric Company have retreated 24.81% so far in 2018 compared with a 4.80% gain for the underlying index, S&P 500 (SPX).

In 2017, General Electric’s stock plummeted 44.78%, thus, it again underperformed the S&P 500, which registered a 19.42% return.

GEs total revenue went up to $30.1 billion during the second quarter ended on June 30th, from $29.1 billion in the year-ago period. In comparison, analysts on average had expected $29.31 billion in revenue.

Earnings from continuing operations attributable to shareholders were reported to have shrunk to $736 million ($0.08 per share) during the latest quarter, from $1.03 billion ($0.12 per share) during the same period a year ago. Weaker performance in power and renewables energy offset gains in aviation and health care.

At the same time, GEs adjusted earnings, excluding pension and restructuring costs, shrank 10% to $0.19 per share during the second quarter. The median forecast by analysts had pointed to a larger drop in adjusted earnings – to $0.17 per share.

According to RBC Capital Markets analyst Deane Dray, profit expectations were outstripped in part due to a larger-than-expected reduction in overhead costs and smaller-than-anticipated losses at GE Capital.

Meanwhile, General Electric revised down its industrial free cash flow target to $6 billion from the $6-$7 billion range it had previously projected. The lower forecast put the companys full-year adjusted earnings target of $1.00 to $1.07 per share into question.

The earnings objective was confirmed by the industrial conglomerate last week, but a number of analysts consider it as being unrealistic.

Vertical Research Partners analyst Jeffrey Sprague attributed the recent drop in the companys shares to “cash and (GE’s) acknowledgement of risk to the second half”.

According to CNN Money, the 17 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $15.00, with a high estimate of $27.00 and a low estimate of $11.00. The median estimate represents a 14.33% upside compared to the closing price of $13.12 on July 20th.

The same media also reported that 15 out of 20 surveyed investment analysts had rated General Electric’s stock as “Hold”, while 4 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, todays levels of importance for the General Electric stock are presented as follows:

R1 – $13.19
R2 – $13.27
R3 (Range Resistance – Sell) – $13.34
R4 (Long Breakout) – $13.56
R5 (Breakout Target 1) – $13.82
R6 (Breakout Target 2) – $13.93

S1 – $13.05
S2 – $12.97
S3 (Range Support – Buy) – $12.90
S4 (Short Breakout) – $12.68
S5 (Breakout Target 1) – $12.42
S6 (Breakout Target 2) – $12.31

By using the traditional method of calculation, the weekly levels of importance for General Electric Company (GE) are presented as follows:

Central Pivot Point – $13.35
R1 – $13.72
R2 – $14.32
R3 – $14.69
R4 – $15.06

S1 – $12.75
S2 – $12.38
S3 – $11.78
S4 – $11.18

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