General Electric Co. (GE) reports Q4 2021 earnings in Tuesday’s pre-market, with analysts expecting the company to post a profit of $0.82 per-share on $21.35 billion in revenue. If met, earnings-per-share (EPS) will mark a tenfold improvement compared to the same quarter last year. However, GE issued a 1-for-8 reverse split in August, so the uptick isn’t nearly as dramatic. The stock topped out in March 2021 and broke down from range support in November.
Reorganization Continues Amid Headwinds
The company is breaking into three pieces, with aerospace, healthcare, and power generation divisions defining new profit centers. Healthcare is a sore thumb right now, as evidenced by a decline in reported sales from $19.9 billion in 2019 to $17.9 billion in the four quarters ending in September. GE is also dealing with heavy debt payments in a rising interest rate environment so refinancing will be more expensive going forward.
CEO Larry Culp outlined GE’s challenges in a weekend Barron’s interview, noting “Is there some deal limbo? Perhaps. But with Omicron, GE is trading in line with the sector. We’re going to continue to drive improvement. I think the story continues to be about our performance. Whether you’re looking at the performance trajectory of this business, or looking at the pieces, I think there’s going to be more appeal.”
Wall Street and Technical Outlook
Wall Street consensus yields a ‘Moderate Buy’ rating based upon 12 ‘Buy’, 2 ‘Overweight’, 9 ‘Hold’, 0 ‘Underweight’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $94 to a Street-high $145 while the stock is set to open Monday’s session just a buck above the low target. This disconnect with Main Street investors highlights broad-based concern about rising inflation and its impact on quarterly profits.
General Electric has posted lower highs since topping out in 2000. The last intermediate uptrend ended above 250 in 2016, ahead of a steep downtrend that posted a 27-year low in 2020. Positive price action into the first quarter of 2021 stalled at the 200-week moving average, yielding a sideways pattern that broke support in the mid-90s in November. The stock has spent the last two months testing new resistance, with last week’s selloff likely to continue in coming weeks.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.
This article was originally posted on FX Empire