Shares of General Electric (GE) reached a new intraday 52-week high on Tuesday, reflecting its impressive performance in the market. With a rise of almost 100% in 2023, GE stock has been on a remarkable upward trajectory.
Factors Driving Growth
Two key factors have contributed to the surge in GE's stock price. First and foremost is the company's improving profitability. Additionally, GE's ongoing transformation, which involves splitting the company up, has been instrumental in driving these gains. Over time, however, it appears that the stock price is now being influenced more by Wall Street and the overall stock market.
While the S&P 500 and Dow Jones Industrial Average both experienced a 0.5% increase in midday trading on Tuesday, GE stock fared even better with a 1.7% surge.
Analysts’ Positive Outlook for 2024
Analysts have expressed a growing confidence in GE's prospects for 2024, which is reflected in the target prices they have set for the stock. RBC analysts Deane Dray and Ken Herbert, who jointly cover GE stock, have revised their target price from $131 to an ambitious $150 per share. According to Dray and Herbert, GE's quality reputation and its leading position in the single-aisle jet engine market will continue to propel its success. Herbert also predicts an impressive 22% operating profit margin for GE's aerospace business by 2025, surpassing the current margin of approximately 19% over the past four quarters.
Industry Expertise and Company Split
As the split of GE's power and aviation businesses looms closer, more aerospace analysts are stepping in to provide coverage and support. This process is expected to be completed in the first half of 2024.
GE's upward momentum in the market is a testament to its enduring reputation and strategic decisions. Looking ahead, the company appears poised for continued success, bolstered by its strong market position and expert leadership in the aerospace industry.
Positive Outlook for General Electric and Caterpillar Stocks
The positive momentum continues for General Electric (GE) and Caterpillar as multiple brokerages increase their price targets for these companies.
Wells Fargo raised its price target for GE shares to $144, while Citi increased its target to $148. Similarly, Goldman Sachs projects a target of $155, and Wolfe Research's target is now $140.
All five of these brokers rate GE shares as a Buy, and this sentiment is echoed by approximately 60% of analysts covering the company. This is higher than the average Buy-rating ratio for stocks in the S&P 500, which stands at around 55%.
The average analyst price target for GE shares is approximately $136, marking an increase of about $8 over the past three months. This positive trend creates a favorable environment for GE shares.
Furthermore, the market as a whole is also contributing to this optimism. Federal Reserve officials indicate a plan to cut interest rates in 2024, which has led to increased bullishness among investors, particularly for cyclical manufacturing companies like GE.
Caterpillar, a well-known machinery giant, provides another example of this positive outlook. As of midday trading on Tuesday, Caterpillar shares were up 1.5%, reaching just under $290 per share. According to Dow Jones Market Data, this would be a record high closing price since January 1972. Notably, Caterpillar stock has experienced gains in 10 out of the past 11 days and has seen a 16% increase so far this month.
The recent upward trend in both Caterpillar and GE shares demonstrates that investors are highly optimistic about the prospects of these manufacturers as we head into 2024.