General Electric Inc. (GE) shares moved marginally higher during Monday's session, but have struggled to breakout from key technical resistance levels following their strong move higher throughout most of September.
William Blair said in a note that GE's 'resurrection' remains on track with accelerating progress. After meeting with Senior VP of Business Transformation, analyst Nicholas Heymann sees evidence of accelerating operational and financial progress that led him to reaffirm his Outperform rating and $14.00 to $16.00 per share price target on the stock over the next 12 months.
Last week, CEO Larry Culp said that the reset year is playing out in-line with expectations, although improving operations would take the longest, at the Morgan Stanley Laguna Conference last week. The executive believes that the Power segment is particularly promising with its strong strategic position in China that could drive outperformance.
Analysts remain concerned over unresolved risks in non-core businesses, such as Long-term Care. Rising competition could also put pressure on the Power segment over the long-term.
From a technical standpoint, the stock rose from lows of around $7.75 to the 50- and 200-day moving averages at around $9.30 in recent sessions. The relative strength index (RSI) moved toward overbought levels with a reading of 59.78, but the moving average convergence-divergence (MACD) remains in a bullish upswing. These indicators suggest that the stock has room to run before experiencing consolidation.
Traders should watch for a breakout from the 50- and 200-day moving averages toward prior highs of around $10.75 over the coming sessions. If the stock fails to breakout, traders could see some consolidation or a move lower to re-test prior lows of around $8.00 before moving higher. The next major catalyst will be the company's earnings on October 29th.
Chart courtesy of TrendSpider.com. Author holds no position in the stock(s) mentioned except through passively managed index funds.