GE: Analysts Say Company Faces Some "Headwinds"
General Electric , our parent company, hosting its Annual Outlook Meeting today. Most traders believe they are likely to reiterate their 10 percent + EPS growth targets and remain upbeat about global growth. Consensus estimate for 2008 is $2.49, up 13.1 percent from 2007 estimates.
However, Merrill Lynch, like most firms, continue to talk about potential "headwinds" like the writers' strike for NBCU, a softening U.S. economy for GE Industrial and a weakening consumer credit cycle for GE Money.
The last seems to be the biggest issue for many; Credit Suisse noted last week that 54 percent of GE's net income is derived from finance.
As a result, Merrill and others have talked about the idea that these headwinds could create a relatively "back-end loaded" 2008 forecast outlook, and this may be one reason the stock has underperformed recently.
GE is up about 1 percent this year, but the S&P 500 is up 6.8 percent; most of the underperformance has come in this quarter. Trading about 15 times 2008 EPS estimates, which is also below its historic average of about 21 times forward earnings.
Note that Honeywell will also be hosting a conference call to talk about 2008 guidance this Thursday.
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