General Electric
stock hit a new intraday 52-week high on Tuesday. Shares have been on a tear recently, rising almost 100% in 2023.
Improving profitability and the yearslong transformation that is splitting the company up are two reasons for the gains. More recently, however, company actions don’t seem to be driving the stock price—Wall Street and the stock market are.
GE
stock was up 1.7% in midday trading Tuesday, while the
S&P 500
and
Dow Jones Industrial Average
were both up 0.5%.
Analysts are feeling better about 2024, and it’s getting reflected in GE stock target prices. RBC analysts Deane Dray and Ken Herbert, who jointly cover GE stock, took their target price to $150 a share from $131 on Sunday.
“We believe GE will continue to benefit from its quality reputation and its leadership position in the [single-aisle jet] engine market,” wrote the analysts. Herbert, who covers aerospace companies for RBC, projects 22% operating profit margins for the aerospace business by 2025. Aerospace has generated a margin of about 19% over the past four quarters.
Dray covers industrial companies. More aerospace analysts are taking coverage or helping out as the split of GE’s power and aviation businesses approaches. That process is expected to wrap up in the first half of 2024.
It’s a similar story at other brokerages. Wells Fargo hiked its price target to $144 from $115 a share this past week. Citi’s target increased to $148 from $135 recently. Goldman Sachs projects $155 a share from $143. And Wolfe Research’s target rose to $140 from $137.
All five of those brokers rate GE shares Buy. Overall, about 60% of analysts covering the company rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
The average analyst price target is about $136 a share, up about $8 a share over the past three months.
That creates a nice tailwind for shares. The market is helping too. Federal Reserve officials expect to cut interest rates in 2024 and that has investors more bullish on shares of cyclical manufacturing companies.
Caterpillar
offers another example of this. Through midday trading Tuesday, shares of the machinery giant were up 1.5% at just under $290 apiece. That would be a record high closing price, according to Dow Jones Market Data, which looked back to January 1972.
Caterpillar
stock is up 10 of the past 11 days, and has risen about 16% so far this month.
That’s quite a run too. Regardless of the reasons, the recent action in both Caterpillar and GE shares shows that investors like the setup for manufacturers heading into 2024.
Write to Al Root at [email protected]
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