GE's Q4 earnings report is about to be released. How does Wall Street view it?
General Electric is set to announce its fourth-quarter 2023 earnings on January 23rd. Adjusted earnings per share are expected to decline by 28%, while revenue is projected to decrease by 18.2%. Despite the anticipated decline in performance, some analysts remain optimistic about General Electric's prospects. Wall Street believes that the company's defense business is poised to increase revenue and predicts a long-term improvement in profit margins. Additionally, General Electric plans to spin off GE Vernova as a company focused on its aviation core business.
Zhitong App has learned that General Electric will announce its fourth-quarter 2023 earnings before the opening of the US stock market on January 23. According to FactSet, the market generally expects General Electric's adjusted earnings per share to decline by 28% YoY to $0.89, marking the first decline in four quarters. Revenue is expected to decrease by 18.2% to $17.18 billion after experiencing accelerated growth for four quarters.
Performance Review
Driven by strong performance in its commercial aviation business, the company achieved significant growth in the third quarter. Data shows that the company's earnings per share in the third quarter were $0.82, compared to a loss of $0.17 in the same period last year, with sales increasing by 18% to $16.5 billion. Its subsidiary, GEAerospace, saw a 33% increase in profit and a 25% surge in revenue.
General Electric plans to spin off GE Vernova in the early second quarter of this year. After the transaction is completed, General Electric will become a company focused on the aviation core business, with a focus on building the future of aviation, and will be renamed GE Aerospace. Its healthcare subsidiary, GE HealthCare Technologies (GEHC.US), made its debut on Nasdaq in January last year.
Wall Street Views
Although the market generally expects a decline in General Electric's Q4 performance, there are still analysts on Wall Street who are optimistic about the company's prospects.
In a research report, TD Cowen stated that General Electric's performance is expected to be in line with expectations. The strong funding and demand from the US Department of Defense for flight management systems and military supplies replacements may increase the company's defense business revenue. TD Cowen raised General Electric's target price from $120 to $130 and maintained an "outperform" rating.
Fidelity Bank predicts that General Electric's long-term profit margin will increase with the driving force of the internal catalysts spun off from Vernova in the early second quarter. Analyst Matthew Akers expects that with the push from double-digit organic sales growth, General Electric's adjusted profit growth (excluding Vernova) will reach high double digits in the coming years.
Akers also mentioned General Electric's "solid" management team and "clean" balance sheet. Fidelity Bank upgraded its rating on General Electric from "hold" to "buy" and raised its target price from $115 to $144.