JPM Upgrades GE For No Reason, Just "Sentiment" And "Investor Numbness"
A month ago, Goldman had no idea how to run the market higher so it quoted Barney Frank as a reason to upgrade GE and cause some serious squeezage. JP Morgan, which prudently sensed that the equity market being a derivative of the dollar weakness needs some substantiation, came out with a comparable GE upgrade last night, raising its target price from $12 to $17, not on anything as fundamental as a quote by a Congressman, but merely "on sentiment, as [it is] one of the last stocks for which a little good news can still go a long way. In the look for non-consensus, catch-up stories, GE stands out as the last, in our view." And it turns out potential upside momentum is good for a 40% increase to a multi-billion company's target price.
In other words, momentum chasers - meet your patron saint - Stephen Tusa, CFA.
Stephen, true to his CFA designation, does admit that the troubles at GE are merely starting to unravel, with concerns including "(1) provision/impairment levels, (2) rising funding costs, (3) regulator uncertainty, and (4) mark-to-market risks (CRE), all of which add to questions around LT earnings power."
Yet, with AIG, FNM, FRE and C already having been gunned well beyond what their bankrupt state allows them to be priced on any gravitationally challenged stock market, the only company that JPM could make a viable momo case for, apparently was CNBC's parent.
We wish momentum chasers all the best as they fall for this oldest trick in the book. We also would like to point out that any "numb" investors who buy this stock just because the 2 guys to your left are numb (and dumb) from all the bad news that will start pouring out soon, will be much number when they see their unrealized P&L on this position in a few months.