GE is still not a buy even with a new CEO, JPMorgan says

Jeff Immelt
Udit Kulshrestha | Bloomberg | Getty Images

General Electric shares on Monday gave up most of their gains from Friday when a report of a possible early retirement by CEO Jeff Immelt, spurred on by activist investor Nelson Peltz of Trian Partners, sparked a rally in the industrial conglomerate.

A JPMorgan analyst was behind the decline Monday after saying the company would need more than just a change at the top to turn around the underperforming stock.

"Further discussion of a CEO transition does not change our standing view that GE is an expensive stock, and we believe that a change would likely bring with it an imminent reset that would further reinforce our thesis," wrote JPMorgan's Stephen Tusa on Monday.

The "facts are cash is weak, margins/share of customer wallet are already at entitlement, the sum of the parts valuation points to a low 20s stock price, not even considering tax and GE corporate accounting dis-synergies, with businesses that are too big to be take-outs, in our view."

Tusa rates GE underweight with a $29 a share 12-month price target. The shares were down a little more than 1 percent in midday trading on the NYSE. GE has fallen 5 percent so far in 2017, badly trailing the market and other industrial stocks.