Why Shares Of General Electric Continue To Move Higher?

General Electric Video 04.03.21.

General Electric Stock Gets A Boost From Analyst Upgrades

Shares of General Electric have started the year on a strong note and gained about 25% year-to-date. Today, the stock tested multi-month highs at the $14 level after Morgan Stanley upgraded the company’s shares and changed its price target from $13 to $17.

Morgan Stanley believes that the upcoming investor day presentation, which is scheduled to take place on March 10, will serve as an additional upside catalyst for the stock.

Earlier, UBS increased its price target for General Electric stock from $14 to $15 which also provided significant support to the company’s shares.

In late January, General Electric released its fourth-quarter report which beat analyst estimates on both earnings and revenue. The company delivered solid cash flow performance, and the market continued to buy the turnaround story.

What’s Next For General Electric?

The current rally of General Electric stock started back in October when traders began to pay more attention to cyclical stocks. The rally continued month after month and pushed the company’s valuation to high levels. Currently, General Electric shares are trading at more than 25 forward P/E for 2022 which looks like a rich valuation for an estabilished cyclical company.

However, the market believes that the upcoming U.S. economic stimulus package and the ultimate improvements on the coronavirus front will provide enough support to the company’s business. In addition, General Electric’s performance is expected to improve in the next several years which is bullish for the stock.

The near-term fate of General Electric stock will depend on whether cyclical stocks will remain strong amid inflation fears, which are highlighted by the recent increase in the U.S. government bond yields.

If the market continues to buy cyclical stocks, General Electric stock will have a great opportunity to develop additional downside momentum as the company also has internal upside catalysts.

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