Wells Fargo upgrades GE to Overweight ahead of ‘built-in catalyst’

Wells Fargo analyst Matthew Akers upgraded General Electric to Overweight from Equal Weight with a price target of $144, up from $115. The upgrade follows a transfer in analyst coverage. GE combines an “attractive business with high aftermarket mix,” as well as solid management team and clean balance sheet, the analyst tells investors in a research note. The firm sees long-term margin upside and a built-in catalyst with the Vernova spin in early Q2. Wells expects high-teens pro forma earnings growth for GE excluding Vernova over the next few years, driven by double-digit organic sales and 4% from capital allocation, “even with limited margin upside as dilutive LEAP engine sales ramp.” Despite already-high profitability, GE is “under-earning” due to investment in new engines, contends the firm.