General Electric (NYSE:GE) has had a great year, with the stock price up 96% over the past 52 weeks. This trend is likely to continue with the GE spin-off Vernova, scheduled for April 2. Wells Fargo analyst Matthew Akers, who recently raised GE’s price target from $177 to $200. Akers maintained an “overweight” rating on the stock.
General Electric has a path to higher margins
According to Akers, GE has the potential to significantly reduce costs in the coming years through the spin-off, which should translate into higher margins down the road. As a smaller company, there is a clear opportunity to reduce business costs, and its GE Aerospace segment is poised to become a cash flow generating space as revenues from engine maintenance LEAP are starting to increase.
Furthermore, Akers believes GE Vernova is worth about $34 per GE share, a relatively high estimate compared to other Wall Street analysts.
How GE Vernova is Trading Currently
The good news is that Akers’ GE Vernova estimate is close to reality. Whole GE Vernova has not yet begun trading on a “regular” basis, but it began trading “when issued” under the symbol “GEV WI” on March 27.
At the time of writing, it’s trading at $133, and since GE shareholders will get one GE Vernova share for every four shares they own in GE, the price equates to $33.25 per GE share, close of Akers’ goal.
On the other hand, GE stock which trades without the right to receive GE Vernova stock (under the symbol “GE WI”) is trading at around $145 at the time of writing this article. As such, GE Aerospace (as the remaining company will be called) is not quite at the level Akers envisioned. However, if he is right about the margin expansion opportunity, it will probably arrive in time.
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Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.
Will General Electric stock hit $200? 1. A Wall Street analyst thinks so was originally published by The Motley Fool
