shares fell sharply on Thursday after the chief of its power division revealed a problem with its newest line of natural gas-fired power turbines, prompting J.P. Morgan to cut its price target for GE's underperforming stock.
The company has discovered an "oxidation issue" that affects the lifespan of blades in its HA-Class turbines, a major product for GE's power division, GE Power Chief Executive Russell Stokes said in a letter posted on LinkedIn.
"Obviously, this was a frustrating development, for us, as well as for our customers," Stokes said in the blog, first posted on Wednesday, adding that the company had implemented a fix that had the turbines working within targeted parameters.
Stokes provided no further details about the problem.
J.P. Morgan analyst Stephen Tusa said in a research note on Thursday that the problem appeared to have resulted in a broken turbine blade at a power plant in Texas owned by Exelon, based on discussions with GE and Exelon.
"Our channel checks, confirmed now by GE Power CEO, GE investor relations and the customer suggest GE has experienced a failure in a 1st stage blade," Tusa wrote in the note. He cut his price target on the stock to $10 from $11.
GE did not immediately respond to requests for comment.
Exelon said it was not immediately able to comment.