General Electric looks to break from financials
A deal with Comcast could help boost GE shares, which have been trailing benchmarkets this year.
By Dan Freed, TheStreet.com
Shares rose slightly on Tuesday even as shares of big financials, including Citigroup, Bank of America, Wells Fargo and American International Group fell. GE's shares are up slightly during the past five trading days through Tuesday, while the S&P 500 declined over that time.
Industrial stocks, with which GE would like to be compared, were more mixed Tuesday, with Honeywell and ITT trading higher while other industrial, including Caterpillar and United Technologies lost value.
While GE's Tuesday volumes were lower than their three-month trailing average, that’s to be expected during a holiday-shortened week. Still, more than 80,000 GE shares traded Tuesday, or about 80% of the three-month trailing average of 100,000 shares.
By contrast, the 192,000 Citigroup shares that traded were less than half the trailing three-month average of 590,000 shares.
The positive sentiment Tuesday may have been driven by options activity. CNBC noted a massive purchase of GE call options that won't pay off unless the stock price hits $23.25 by January 2011 -- 44% higher than where it closed Tuesday.
GE may also have gotten a boost from a JPMorgan report Tuesday. Steve Tusa, a JPMorgan analyst, reiterated his "overweight" rating following a meeting with chief financial officer Keith Sherin.
Tusa predicted a "dramatic reduction" in losses at GE Capital "longer term." Still, his $17 price target does not seem to offer a great incentive to buy the stock.
GE has two important presentations to investors Dec. 8 and Dec. 15 that Goldman Sachs analyst Terry Darling thinks could provide positive catalysts for the stock.
Darling argues quarterly updates GE has been providing on the health of its financial services unit have given a boost to General Electric's stock price. Nonetheless, GE's stock price has underperformed the broader market since the updates began just over a year ago.
Another positive catalyst for GE could come if it finalizes a deal with Comcast in which the cable operator is expected to take a controlling stake in NBC Universal. A recent Financial Times report indicated GE and Vivendi, which holds a 20% stake in NBC Universal, may be as much as $1 billion apart on how to value Vivendi's stake.
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