Analyst Note| Joshua Aguilar |
Despite the headline stock trade-off, narrow-moat-rated General Electric had a solid first quarter. We increase our fair value estimate to $15.10 from $14.10 previously, primarily due to interest rate tailwinds in GE’s pension liability, as well as time value of money. However, we also raised our fair value due to greater than expected progress in both healthcare and aviation’s margin profile (with the latter already hitting its 2021 target) in the first quarter, which itself was offset by weaker than expected top line revenue from aviation. With this latest raise, GE now is the cheapest name among our larger U.S. multi-industrials.