General Electric (NYSE: GE) ended -10.3% in Tuesday’s trading, declining to its lowest closing since November 2020 in its biggest sale in two yearsafter saying it was heading towards the low end of its 2022 economic forecast, as it struggling with the supply chain snare and rising raw material costs.
“It’s as challenging a macro background as I’ve ever seen,” CEO Larry Culp told Bloomberg, adding that the company had expected a slow start to the year, but revenue growth would have been about six percentage points higher if it had been in able to get all his orders out the door.
GE (GE) delivered a Q1 profit that beat Wall Street estimates, but it will need strong H2 performance to achieve its $ 2.80- $ 3.50 year-round adjusted EPS guidance, which the company says, trends towards the lower end, and $ 5.5 billion. -6.5 billion USD from free cash flow.
Free cash flow was worse than expected at a negative $ 880 million, although Q1 is typically GE’s (GE) weakest based on seasonal business.
Bank of America’s Andrew Obin maintained its buy rating and $ 132 price target on GE (GE), but said the supply chain’s strain on the results was more severe than expected.
Obin continues to look upward to 2022 FCF guidance, “but recognize that this will require some improvement in the supply chain.”
Barclays analyst Julian Mitchell, who rates the stock at Overweight, noted the lack of buybacks in Q1, perhaps a surprise given the weak stock price and recent board approval.
Perennial JP Morgan bear Stephen Tusa said the quarter was “a miss, plain and simple, on almost every front.”
3M shares also fell today after saying that supply chain problems will continue for the foreseeable future.