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Wall Street Is Flipping to GE Stock From Honeywell for 2022Wall Street Is Flipping to GE Stock From Honeywell for 2022Root, Al.Barron's (Online); New York Wall Street is switching teams among industrial giants, warming up General Electric stock while cooling to shares of Honeywell International. Both are conglomerates with aerospace divisions, and both can benefit from an improved economy, and a post-Covid recovery in commercial aerospace. But GE also has other things going for it. Tuesday, Credit Suisse analyst John Walsh upgraded GE (ticker: GE) stock to Buy from Hold, and downgraded Honeywell (HON) stock to Hold from Buy. Walsh sees GE executing well on its turnaround plan. GE has paid down tens of billions of dollars of debt back over the past three years. What's more, GE's splitting into three companies over the coming two years. There is a lot going on that can increase value, and the entry point for shares is looking attractive to the analyst. "The 14% pullback since the [split] announcement on Nov. 9 has created an opportunity for both absolute and relative price appreciation as GE should benefit from a cyclical recovery in 2022," wrote Walsh. His price target on GE stock is $122, which works out to 22 times his 2023 earnings-per-share estimate. For Honeywell, Walsh calls it a high quality company, but "as we look across mega cap [industrial] stocks with leverage to cyclical Aerospace recovery, we see more upside potential in GE." So the upgrade/downgrade is a relative call for Walsh. His price target for Honeywell stock is $226—about 23 times his 2023 EPS estimate. Honeywell stock has been the far more consistent performer over time, but Walsh isn't alone in his feelings that GE has more in store. Analysts are more upbeat about GE these days—about 65% of those who cover GE stock rate it at Buy, up from about 60% a couple of months back. Wall Street is also feeling a little less optimistic about Honeywell stock. This is the second downgrade for Honeywell stock in recent weeks. Bank of America analyst Andrew Obin downgraded the shares to Hold from Buy in early December. Obin, for his part, was worried about supply-chain problems impacting first-half 2022 results. About 57% of analysts rate Honeywell stock at Buy, down from about 60% a couple of months ago. The average Buy-rating ratio for stocks in the S&P 500 index is about 55%. GE stock is getting a boost Tuesday. Shares are up about 2.3% in midday trading. Honeywell stock is up about 0.5%. The S&P 500 is about flat. The Dow Jones Industrial Average is up about 0.7%. |
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