General Electric Higher After Cutting 2019 Guidance

General Electric Higher After Cutting 2019 Guidance

General Electric Company (GE) stock is trading nearly 4% higher on Thursday morning after Chairman and CEO H. Lawrence Culp Jr. provided fiscal year 2019 guidance that was below consensus estimates. The buy-the-bad-news reaction could signal better times for beaten-down shareholders, indicating that sellers may have finished their work after a massive two-year decline. Even so, the company faces a major challenge in restoring its tarnished reputation after years of corporate neglect.

GE expects 2020 and 2021 adjusted industrial free cash flow to be positive after a negative 2019. The stock sold off nearly 8% on March 5 after the company disclosed the 2019 deficit, while this morning’s positive view for future years offers a potential light at the end of a dark tunnel. That may be sufficient to print a long-lasting bottom, but healthy returns aren’t likely until the company makes good on a long string of bad predictions about future results.

Despite this morning’s bullish reaction, it’s hard to recommend buying GE stock at the current price because it’s still trading below resistance at a declining highs trendline in place since a January 2018 breakdown. A rally above the trendline and 200-day exponential moving average (EMA) near $11 is now needed to improve the 2019 technical outlook and support modest upside into the mid- to upper teens.

GE Long-Term Chart (1994 – 2019) 

GE Short-Term Chart (2016 – 2019)

The Bottom Line

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