A Goldman Sachs analyst lifted his opinion on diversified conglomerate General Electric , saying the maker of light bulbs and power generators is seen by many investors as a safe bet in an uncertain industrial environment.
Deane M. Dray in a client note amended his rating on General Electric to "Conviction Buy" from "Buy" ahead of a Dec. 12 outlook meeting with Chief Executive Jeff Immelt. (GE is the parent company of CNBC.)
Anticipated upbeat comments at the meeting could drive shares upward, he wrote. Analysts will be looking for comments on the company's plan to turnaround NBC Universal, which has been plagued by low Nielsen television ratings in the past, as well as information on a recovery in GE's power systems segment and emerging market opportunities, he said.
In addition, the fourth quarter is typically seasonally strong for General Electric, wrote Dray, who has a $42 target price on shares. That is partially due to overall market strength, coupled with some funds' use of GE and similar stocks to lock in annual gains at year-ends.
Dray expects the company's earnings to grow between 10% to 12% in 2007.
"At this point in the cycle, in a moderating growth operating environment and greater uncertainty in the industrial sector, we believe investors will gravitate to GE's late-cycle exposure, high-margin services mix, emerging markets strength, and attractive earnings visibility/consistency," wrote Dray.
Dray also estimates the conglomerate will spend between $6 billion to $10 billion in industrial acquisitions over 2005 to 2007, and expects some restructuring of its industrial portfolio ahead.