Citi, BAML analysts see progress in GE’s annual report – Seeking Alpha

General Electric (GE -3.4%) drifts lower even after winning some analyst support for its recently released 2019 annual report that was knocked by longtime GE bear Stephen Tusa of J.P. Morgan.

Citi analyst Andrew Kaplowitz sees the lack of incremental negatives in the filing as a sign of progress, indicating the company remains on the path to a sustainable turnaround.

Kaplowitz, who maintains a Buy rating and $16 price target on GE shares, sees no signs of significant emerging "new issues," which he believes is significant because it lends credibility to the viability of GE's previously announced roadmap for improving results over the course of several years.

BofAMerrill Lynch's Andrew Obin also reiterates his Buy rating with a $16 target after reviewing the 10-K, saying GE"has undergone a significant reinvestment cycle, positioning it well from a competitive standpoint."

Obin estimates GE Industrial's free cash flow will experience a further $1.6B drag from supply chain transformation in 2020, but decreased factoring will lower that type of drag in subsequent years.

GEs simplification efforts are paying off, Obin says: Compared to last year, GE has 38% fewer manufacturing sites, 16% lower gross Industrial debt, 10% fewer subsidiaries and 8% lower functional costs, yet its adjusted GE Industrial operating profit improved 7% in 2019.

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Citi, BAML analysts see progress in GE's annual report - Seeking Alpha