General Electric Company’s (NYSE:GE) latest earnings report was nothing short of a disaster.
The industrial giant missed by a mile on its bottom line numbers, and its outlook for the rest of the year wasn’t much better.
The reaction from investors was swift and brutal, sending the stock down over 8% in premarket trading on Friday. But then, something very unexpected happened: buyers stepped back in.
Incredibly, GE shares closed up nearly 1% on the day when all was said and done. Such a quick intraday turnaround is a great sign for shareholders, which have been hoping to see a bottom form for the past year or more.
We may have seen just that on Friday, but as CNBC notes, Wall Street analysts don’t think GE is out of the woods yet:
“This quarter was undoubtedly worse than expected, with an industrial result that was worse than what we saw in March 2007, preceding the financial crisis,” J.P. Morgan analyst Stephen Tusa wrote in a note Friday.
The firm says GE’s businesses “are impaired,” citing the continued generation of “essentially zero” free cash flow. J.P. Morgan does not see GE’s management as leading a simple restructure of the company. Instead, J.P. Morgan says Flannery and others are “fighting to salvage value.”
“The bottom line is that there are more questions than answers here,” Tusa said.
In November, the company has promised to provide more insight about its turnaround plans, which are expected to include massive layoffs and other cost cuts.
So while the stock may have put in a temporary bottom for now, there’s another major hurdle looming in just a few weeks.
General Electric Company shares closed at $23.83 on Friday, up $0.25 (+1.06%). Year-to-date, GE has declined -22.58%, versus a 16.66% rise in the benchmark S&P 500 index during the same period.