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1 Wall Street Analyst Thinks General Electric Stock Is Going to $191. Is It a buy?

Motley Fool - Wed Mar 20, 7:29AM CDT

In a matter of days, General Electric(NYSE: GE) will cease to exist.

To be more precise, GE will cease to exist in its current form. On April 2 the company -- which has already spun off its healthcare operations -- will split into two separate businesses. That means the latest analyst takes on GE will be the last in its current configuration.

One of those soon-to-be-outdated takes is quite bullish, anticipating a double-digit percentage rise in the share price. Let's see whether the company's future is as rosy as that prognosticator believes.

General Electric just got a big price target raise

Near the beginning of March, UBS analyst Chris Snyder pumped his GE price target nearly 40% higher, changing it from $138 per share to $191. In doing so, he maintained his buy recommendation on the once-monolithic industrial stock. The new target implies a 10% bump over the next 12 months from the current price.

In his research note detailing the change, Snyder acknowledged that many market players consider GE to be richly valued. However, he wrote of "the company's increasingly attractive positioning across favorable end markets." The analyst also feels that management is determined and able to grow all of its major business lines.

He added that "when combined with impressive execution and a $60 billion-plus revenue base, GE continues to offer the most torque [toward developing a] positive rate of change across U.S. industrials."

GE looks over-bought

Investors are excited about the continued division of GE, with the latest phase being the split into two (resulting in GE Vernova, the current company's power business and related assets, and the self-explanatory GE Aerospace). After all, those folks have pushed the stock's price up by 92% over the past year.

I don't feel GE's current valuations are worth that kind of excitement, and it isn't probable that the three legacy companies will do vastly better on their own. Snyder is right about the present GE's advantages, but I don't feel they're electrifying enough to keep that share price soaring.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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