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General Electric (NYSE:GE) ended -10.3% in Tuesday’s trading, tumbling to its lowest close since November 2020 in its biggest selloff in two years, after saying it was trending toward the low end of its 2022 financial forecast as it struggles with supply chain snarls and rising raw material costs.
“It is as challenging a macro backdrop as I’ve ever seen,” CEO Larry Culp told Bloomberg, adding that the company had expected a slow start to the year, but revenue growth would have been about six percentage points higher if it had been able to get all of its orders out the door.
GE (GE) posted Q1 profit that beat Wall Street estimates, but it will need a strong H2 performance to achieve its full-year guidance of adjusted EPS of $2.80-$3.50, which the company said is trending toward the lower end, and $5.5B-$6.5B from free cash flow.
Free cash flow was worse than forecast at negative $880M, although Q1 is typically GE’s (GE) weakest based on the seasonality of its businesses.
Bank of America’s Andrew Obin maintained his Buy rating and $132 price target on GE (GE) but said the supply chain drag on results was more severe than expected.
Obin continues to see upside to 2022 FCF guidance, “but acknowledge this will require some supply chain improvement.”
Barclays analyst Julian Mitchell, who rates the stock at Overweight, noted the lack of buybacks in Q1, perhaps a surprise given the weak share price and recent board authorization.
Longtime J.P. Morgan bear Stephen Tusa said the quarter was “a miss, plain and simple, on almost all fronts.”
3M shares also fell today after saying supply chain problems will continue for the foreseeable future.
