GE has lots of good stuff going on -- but it's not enough to turnaround the company just yet

  • General Electric‘s shares have made an impressive turnaround at the beginning of the year.
  • GE stands to benefit from tax reform, buybacks, and the divestiture of its lighting and transportation business, but it’s still too early to tell how well the company will perform, an Oppenheimer analyst said.
  • Given its low valuations from a tepid 2017, Warren Buffett said he would buy shares at “the right price.”
  • To view GE’s stock price in real-time, click here.

General Electric has a few positive things going for it, but it’s still too early to tell if it’s enough to provide a boost for the long haul, Oppenheimer Analyst Christopher Glynn said.

He sees several growth blocks on the horizon, including lower cash restructuring, prospective cash flows from a sale of its Baker Hughes gas and oil division, and the potential return of GE’s dividend.

Last November, the company slashed its dividend by 50%, or $US0.12 a share, and it is still wrapping up the divestiture of its lighting and transportation business.

GE also announced that it would shed its majority stake in Baker Hughes, its oil and gas unit. Glynn estimates the division is worth around $US25 billion. He expects GE to register 62.5% of the proceeds from the $US3 billion Baker Hughes authorised for buybacks.

Despite some positive signs, Glynn still cut his 2019 earnings forecast because of the company’s weak 2018 guidance and slow contract asset growth, which has prompted the company to introduce some cost-cutting measures, including job cuts.

Shares of GE have jumped 6.8% year-to-date after tumbling as much as 40% in 2017. It is among the top performers in the Dow Jones industrial average this year.

GE’s stock is up about 2% on Thursday at $US19.33 a share.

To read more about why investors don’t like GE’s turnaround plan, click here.

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