General Electric stock could potentially double: Goldman Sachs

·Anchor, Editor-at-Large
·2 min read

Goldman Sachs thinks it's time to back up the dump truck on still fundamentally beat up industrial giant General Electric (GE). 

The call: GE may not be so fundamentally beat up for much longer. 

"We view GE as the ultimate self-help, re-opening levered story in Industrials," said Goldman Sachs analyst Joe Ritchie in a new research note on Tuesday. The analyst slapped a $16 price target on GE's stock, representing about a 22% upside from current levels. 

Shares rose 1.3% to $13.06 in early afternoon trading Tuesday. GE's stock is up 21% year-to-date, per Yahoo Finance Plus data. That's better than the 18% gain in Caterpillar (CAT) and the 13% rise in 3M (MMM), two fellow industrials. 

But Goldman's Ritchie didn't rule out a much higher move to the upside for GE's stock as it continues to repair its finances under well-paid CEO Larry Culp and partakes in the global economic recovery. 

"We view the next chapter for GE, beyond our $16 price target, as being driven by +double-digit free cash flow margins (or $1/share in free cash flow), which would imply a $20+ valuation," Ritchie posited. 

For 2021, Ritchie estimates GE will generate $4.2 billion in free cash flow. The company's guidance called for free cash flow in the range of $2.5 billion to $4.5 billion. Adjusted earnings are forecast by GE to come in at $0.15 to $0.25 for 2021.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

What’s hot from Sozzi:

Watch Yahoo Finance’s live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, and LinkedIn.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting