General Electric (GE)
General Electric is one of the leading industrial conglomerates in the world. As a century-old company, GE has built a strong presence in aviation, health care, renewable energy and power.
Its share price, however, has been anything but strong. Despite reporting solid Q4 results earlier in the week, the stock is off 8% in 2022.
The company earned US$20.3 billion of revenue in Q4, down 3% year over year. Adjusted earnings surged 59% year over year to 92 cents U.S. per share, easily topping Wall Street’s expectation of 85 cents.
More importantly, management completed a US$25 billion debt tender transaction, effectively reducing its gross debt by US$87 billion over three years.
Goldman analyst Joe Ritchie forecasts a strong rebound for the shares due to GE’s strengthening financial position.
“The bottom line is the narrative on GE has shifted (at least temporarily) from [free cash flow] to earnings as the company has effectively demonstrated its ability to de-lever faster than expected,” he said.
On Jan. 26, Ritchie reiterated a buy rating on the company and set a price target of US$124, implying a potential upside of close to 40%.
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Coinbase Global (COIN)
Coinbase shares have fallen about 30% year to date, and it’s not hard to understand why.
Coinbase operates the largest cryptocurrency exchange in the U.S., earning a transaction fee every time someone buys or sells on the platform. Right now, cryptos aren’t exactly hot commodities.
Bitcoin — the largest cryptocurrency in the world — was trading at US$47,700 apiece at the beginning of the year. Today, it’s at around US$37,000, representing a year-to-date decline of more than 20%.
That said, Goldman Sachs sees a major rebound in Coinbase shares. Analyst Will Nance reiterated a "buy" rating on Coinbase this week, saying that the company remains a “blue chip way to gain exposure to the continued development of the crypto ecosystem.”
In Q3, Coinbase had 7.4 million retail monthly transacting users. It earned US$1.1 billion in transaction revenue and US$145 million in subscription and services revenue.
With a price target of US$288, Goldman is projecting more than 60% upside in Coinbase shares.
Software giant Microsoft has been bucking the market downtrend over the past few days with some positive headlines.
On Jan. 18, the company announced that it would acquire video game giant Activision Blizzard in an all-cash deal valued at US$68.7 billion. It would mark Microsoft’s biggest deal to date, more than twice as large as its US$26.2 billion purchase of LinkedIn in 2016.
The company also reported strong quarterly earnings earlier this month. For the December quarter, revenue rose 20% year over year while earnings per share increased by 22%.
Trading at around US$300 per share, Microsoft is already a massive company commanding a market cap of more than US$2 trillion. But Goldman expects the tech gorilla to add another C-note to its stock price, fueled largely by strong cloud computing growth prospects.
Goldman analyst Rangan Kash has Microsoft on the firm’s conviction buy list with a price target of US$400, representing upside of roughly 30%.
“[W]e continue to view Microsoft as uniquely positioned to benefit on digital transformation initiatives and public cloud adoption (amongst other secular tailwinds) with a strong presence across all layers of the cloud stack (applications, infrastructure, and platforms),” Kash wrote.
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