Investing

Analyst betting on GE CEO Larry Culp: 'This is a dark day,' but stock 'will come back'

Key Points
  • General Electric may be beaten down for a while, but it is bound to turn around, says analyst Brian Langenberg.
  • Langenberg says he believes in new CEO Larry Culp.
  • "He will get it done. He's been there, done that," says Langenberg.
We want to see GE bring debt down from operations: Pro
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We want to see GE bring debt down from operations: Pro

General Electric may be beaten down for a while, but it is bound to turn around, analyst Brian Langenberg told CNBC on Monday.

Langenberg said he believes in new CEO Larry Culp, whom he met when Culp was in his mid-30s. Culp, now 55, replaced John Flannery as chairman and CEO on Oct. 1.

"It isn't going to be fixed today, it's not going to be fixed tomorrow, and it isn't going to be fixed next year," the principal at Langenberg & Company said on "Closing Bell."

"But you believe in this guy because he will get it done. He's been there, done that."

Shares of the industrial conglomerate closed down 6.88 percent on Monday, after Culp said he feels the "urgency" to reduce the company's leverage and will do so through asset sales. His comments, on "Squawk on the Street," initially sent the stock below $8 a share for the first time since March 2009.

Langenberg said institutional investors want to keep their jobs and therefore don't want to be holding a stock like GE right now.

"This is a dark day, but this will come back," he said.

"At the very top of this organization, we're swapping out a management culture that was 'tell me what I want to hear and let me blow smoke in my own face' to 'embrace the reality and fix this,'" he said.

Jim Corridore, senior equity analyst at CFRA Research, cut his price target on Monday to $9 from $12 after Culp's comments.

Among other things, Culp said that the power business hasn't bottomed yet and that he has "the challenge of a lifetime."

The CEO also said the company needs to bring leverage down and it has "plenty of opportunities through assets sales to do that."

Corridore would like to see GE bring down its debt using cash from its operations instead of using credit lines or selling assets.

"The company still has a way to go to improve operations before they can get cash positive in order to pay down debt organically rather than from tapping markets," he told "Closing Bell."

However, Langenberg said in this "boom economy" there is plenty of liquidity.

And while it would be ideal to use cash from operations, "We're really not going to get that next year," he said. "There's plenty of assets to sell if necessary."

There is at least one thing Corridore and Langenberg agree on: Culp.

"I believe in Larry Culp as well," Corridore said. "But he's six weeks into the job and this is a behemoth of an undertaking for him."

Corridore said he doesn't see why he would put investors into the stock now. Instead, he'd wait for GE to prove itself. He wants to see the company set and hit new financial targets, as well as have a couple of quarters with "no new bombs."

"Then we can start to have some faith that the restructuring is in place, is getting some traction and the company is on the right track," Corridore said.

— CNBC's Michael Sheetz contributed to this report.

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