General Electric Co. (NYSE: GE) is seeing its worst stock plummet since its decline in the time period of late 2007 to 2009. In the past two days, GE shares have plummeted 11.4 percent after the company had announced that it will slashing its dividend in half from $0.24 to $0.12.
Many analysts and investors are voicing their concerns as the long time company is facing one the worst financial issues and struggling sales. John Flannery, CEO of GE, who took the reigns after Jeff Immelt stepped down in August, has begun to sell off segments of GE as well diverting attention into other segments that continue to show steady growth.
But even with Flannery’s new outlook for the company, analysts still remain skeptical.
RBC Capital has now lowered its perform rating for GE to a hold. RBC analyst, Deane Dray, wrote in a note to clients saying that Flannery’s plan is “a number of disappointment and unsettling disclosures”, also adding that it one of the reasons to “believe the stock bottoms here.”
Dray downgraded his price target to $20 from $25.
J.P. Morgan analyst, Stephen Tusa, who feared the dividend cut prior to the announcement, has now downgraded to sell rating and a price target of $17 from $19.
Deutsche Bank’s analyst, John G Inch wrote to clients saying: "We continue to expect downgrades of GE's debt to be forthcoming.”
Inch has now downgraded GE to a sell rating and a price target of $18 from $21 following the third quarter earnings miss and the dividend cut.
Goldman Sachs analyst, Joe Ritchie said “We see no quick fix to GE's problems as years of financial engineering, complex reporting and mis-aligned incentives are coming to bear.”
Peter Snow, director of investment research with NFP Corporate Benefits said that, "Investors liked GE because it was a stable company with a consistent rising dividend," but now Snow says, "GE no longer has that profile,” according to The Street.
After the dividend cut, Flannery announced that the company will cut nearly $20 billion in assets and focusing the company’s attention to its three primary revenue growers: aviation, power, and health care. These three segments accounted for approximately 60 percent of 2016 fiscal year revenue
Even though many analysts remain unsure of GE’s outlook, Flannery says that he has an understanding of the company’s current issues and says that, "Going back to the past is not productive."
As for the future, investors should remain cautious. GE is facing a shaky year, but Flannery has a positive outlook and is working effortlessly to recover the company from its current state. This could possibly be a new era for the 125 year old company, but if turnaround efforts are unsuccessful, it may be the end of the run for GE.
GE shares have fallen 43.4 percent this year and performing 31 percent under the S&P 500 average.