General Electric (NYSE: GE) stock price jumped to the highest level in the last fifteen months amid the substantial improvement in financial numbers. GE share price also received support from the analyst’s positive commentary and price target hikes. The company reported better than expected growth in free cash flows for fiscal 2019; GE expects significant improvement in free cash flows for 2020.
General Electric share price soared close to 25% in the last twelve months. The company’s strategy of selling billions of dollars of assets along with investments in industrial and power businesses is enhancing future fundamentals. It has also reduced billions of dollars of debt in the past couple of quarters.
Free Cash Flow Expansion Boosted General Electric Stock Price
General Electric announced that its manufacturing cash flows are likely to hit $4bn in 2020 compared to the Wall Street expectations of $2.2bn this year. This is up from $2.32bn in the last year. The company praises its Baker Hughes and Wabtec divestitures along with a strong performance from its Healthcare and Aviation segment’s for a robust cash position.
It has also been reducing the debt at faster than expected pace, thanks to cash generation potential. In the last quarter alone, GE reduced consolidated debt by $7B, reducing leverage to 4.2x EBITDA from 4.8x in the previous years. Its adjusted earnings per share of $0.21 enlarged 50% from the year-ago period. GE expects to generate 2020 earnings per share in the range of $0.50 to $0.60.
Analysts See Strong Upside
Although GE share price rallied more than 25% in the past twelve months, the market pundits are anticipating further upside in the coming days. Citi raised the GE price target to $16, citing improving cash generation and declining debt position. “With an initial 2020 outlook indicating an expectation of further progress in its operational and financial turnaround, the shares “could be poised for further upside as GE executes,” Citi analyst Kaplowitz contends.
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