There is no short-term turnaround in sight for General Electric's (NYSE: GE) power business, according to UBS.
The firm lowered it price target to $13 from $16 for GE shares, citing pricing pressures and share losses in the key market. UBS also reiterated its neutral rating for the industrial giant, one of the initial powerhouses in the New York Stock Exchange.
"Power market improvement is needed to make a meaningful impact on earnings, but we see signs the market is deteriorating," analyst Steven Winoker said in a note to clients Wednesday.
"While cost-out remains a primary focus for the business, the end markets are far from cooperative with regard to pricing, demand and competition — and if anything require even more aggressive cost reductions, forcing GE into a vicious cycle."
The analyst noted that the company's second-quarter power business orders dropped off 26% and sales were down 18%. He said GE had a 47% share of the global large gas turbine business from 1997 to 2017 versus only 11% this year.
But GE news is not all bad Wednesday: GE Transportation announced today that Canadian National Railway (NYSE: CNI) will acquire 60 additional locomotives, expanding the class I’s 200-unit order placed in December 2017.
Similar to CN’s 2017 purchase, this order includes Tier 4 Evolution Series locomotives equipped with GE Transportation’s GoLINC™ Platform, Trip Optimizer System and Distributed Power LOCOTROL® eXpanded Architecture to maximize train effectiveness and efficiency.
GE shares declined 49% in the past 12 months through Tuesday versus the S&P 500's 18% return. The shares began Wednesday down 29 cents, or 2.3%, to $12.38
