The firm believes that the management might have been over ambitious regarding its long term goals
General Electric Company (NYSE:GE) has been reaffirmed at Market Perform rating following its digital investor day. Analyst Christopher Glynn believes that the company’s guidance and future plans do not warrant an upgrade and was skeptical regarding the company’s ability to execute according to the laid out plan. The digital investor day was largely focused around the company’s large scale industrial transformation that helped secure a revenue of $48 billion in terms of industrial services during the year 2015.
However, it lacked insight regarding the company’s future growth plans and how is it going to execute in accordance with the said plan. Mr. Glynn notes that GE’s management indicated that none of the business segments of GE has enough resources to completely develop its industrial cloud services App and will require outside help nonetheless.
Mr. Glynn believes that the targets set by GE’s management are a tad unrealistic, however, refrained from any lofty comments the visibility regarding such is severely limited. There is an abundance of growth potential in the industrial app and services market but its connection with GE’s core business is minimal at best. The analyst highlighted that GE lacks two important components of the development process, namely, lack of domain knowledge and lack of expertise and resource in the field of digital and business analytics in order to develop an app related to cloud services economy.
The management guides for $1.4 billion of incremental investment on digital services and new initiatives in both vertical and horizontal perspective. Oppenheimer continues to remain on the sidelines without issuing a price target on the stock. The analyst opinion for GE consists of ratings from 19 analysts which are distributed as, six strong buy, four buy, eight hold and one underperform. The stock now trades at a price of $29.62, having gained 1% since the opening of the premarket trading session.