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General Electric Co.'s gloomy outlook issued last week began to show its repercussions, as analysts absorbed the company's dire prospects and slashed their 52-week price targets on its stock, causing its shares to slide by as much as 6 percent.
Major research agencies lowered their industrial company's rating after its third-quarter earnings fail to hit estimates on Friday.
The company's third quarter profits were affected by restructuring expenditures and weak performance from its power and oil and gas units.
JPMorgan Chase & Co.'s Steve Tusa reduced his estimate to $19 from $20, while retaining an “underweight” rating.
Two firms downgraded their ratings for General Electric shares due to worries regarding dividend cuts at its November 13 analyst meeting. GE has a 4.2 percent dividend yield. Morgan Stanley analyst Nigel Coe said the reduction in their price target for the company was due to a substantial cut to earnings estimates. The analyst also perceive a higher probability of a dividend cut that was not priced in, causing Coe to believe that investors need to take action to safeguard against the possibility of near term underperformance if a dividend cut takes place in November.
Coe lowered GE's share rating to underweight from equal weight and also lowered the price target for the firm to $22 from $25.
UBS also said the firm's 88 percent earnings payout rate for its dividend has a high probability of declining. The company lowered its rating on GE to neutral from buy and downgraded its price target to $24 from $31.
