Lehman Downgrades GE to 'Equal-Weight'
Lehman Brothers downgraded General Electric (GE ) to equal-weight from overweight.
On Thursday the company reaffirmed third-quarter 2002 earnings per share guidance.
Analyst Robert Cornell says at GE's investor meeting Thursday, the key messages were that a recovery in short-cycle businesses has stalled and that losses at ERC (Employers Reinsurance) are pressuring GE Capital's earnings. He notes the company expects to meet its $0.41 third-quarter earnings per share consensus, aided by a $0.03 gain on the June sale of Global eXchange Services, its business-to-business e-commerce unit. He says the company is keeping its $1.65 2002 guidance, but appears less positive about it.
Cornell says the company's long-cycle businesses is on track, and that the short-cycle businesses are reflecting a weak economy. He cut the fourth-quarter earnings per share estimate to $0.43, cut the 2002 estimate to $1.63, and cut the 2003 estimate to $1.70. He also trimmed the target to $35.