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General Electric shares gain the most in two weeks on Tuesday, quarterly free cash flow exceeds estimates, FY 2021 outlook positive

General Electric Co’s fourth-quarter free cash flow, reported on Tuesday, topped Wall Street estimates, while the company set a target for that essential performance measure at $2.5 billion to $4.5 billion for the full-year 2021, citing better operational management.

General Electric shares closed higher for the fifth time in the past ten trading sessions in New York on Tuesday. It has also been the sharpest single-session gain since January 12th. The stock went up 2.73% ($0.30) to $11.29, after touching an intraday high at $12.21, or a price level not seen since February 21st 2020 ($12.46).

Shares of General Electric Company have risen 4.54% so far in 2021 compared with a 2.49% gain for the benchmark index, S&P 500 (SPX).

In 2020, General Electric’s stock went down 3.23%, thus, it underperformed the S&P 500, which registered a 16.26% gain.

Free cash flow from industrial operations was reported at $4.37 billion during the fourth quarter. Previously, GE had forecast a cash flow of at least $2.5 billion in Q4, while analysts on average had anticipated $2.6 billion in quarterly cash flow.

The company reduced costs by over $2 billion and also took other measures to save $3 billion in cash during 2020 in order to mitigate the impact of the coronavirus pandemic.

The industrial conglomerate’s power unit reported a 3% year-on-year increase in profit during the latest quarter.

Earnings per share, which exclude special items, were reported at $0.08 during the quarter ended on December 31st, while a consensus of analyst estimates had pointed to earnings of $0.09 per share.

For the full-year 2021, GE forecasts adjusted earnings within the range of $0.15 to $0.25 per share, after it earned $0.01 per share in 2020.

Analyst stock price forecast and recommendation

According to CNN Money, the 17 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $13.00, with a high estimate of $21.00 and a low estimate of $7.00. The median estimate represents a 15.15% upside compared to the closing price of $11.29 on January 26th.

The same media also reported that at least 14 out of 21 surveyed investment analysts had rated General Electric’s stock as “Buy”, while 6 – as “Hold”.

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