It was a dark day for General Electric (GE) .
On June 19, 2018, the last original member of the Dow Jones Industrial Average was removed from the venerated index and replaced by Walgreen Boots Alliance (WBA) .
GE, which had been co-founded by Thomas Edison — the Wizard of Menlo Park — had been continuously trading on the Dow since Nov. 7, 1907.
But the company had been the worst-performing stock on the Dow in the prior year, having lost nearly half its value. GE, which had shed several assets, cut its dividend for only the second time since the Great Depression.
“The low price of GE shares means the company has a weight in the index of less than one-half of 1 percentage point," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said, according to the New York Times. "Walgreens Boots Alliance's shares price is higher and it will contribute more meaningful lead to the index."
By including Walgreens, Blitzer added, the Dow "will be more representative of the consumer and health care sectors of the U.S. economy."
A GE spokeswoman told CNN that the company was "focused on executing against the plan we've laid out to improve GE's performance."
HUSSEIN FALEH/AFP via Getty
GE CEO says 2024 will be 'momentous year'
"Today's announcement does nothing to change those commitments or our focus in creating in a stronger, simpler GE," she said.
The company was planning some very bold steps.
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In 2021, GE said it would split into three publicly traded companies: GE HealthCare, GE Aerospace and GE Vernova, its power business, which would focus on electrification and carbonization.
“We are putting our technology expertise, leadership, and global reach to work to better serve our customers,” Chief Executive Lawrence Culp said at the time.
In January, GE posted fourth-quarter earnings of $1.08 a share, down 13% from the year-earlier period but firmly ahead of the Wall Street consensus forecast of 91 cents a share.
Revenue fell 15% from a year earlier to $18.5 billion, again topping analysts' estimates of a $17.42 billion tally.
Culp told analysts that "2024 will be a momentous year as we launch GE Aerospace and GE Vernova in early April."
"Looking at our results, we more than tripled our earnings and generated almost 70% more free cash flow in 2023," he said.
Last week, the company hosted two separate investor days for GE Aerospace and GE Vernova.
GE Aerospace said adjusted revenue would grow by low-double-digits percent or more, with operating profit of $6 billion to $6.5 billion and free cash flow greater than $5 billion.
Analyst is drawn to GE positioning
Meanwhile, GE Verona affirmed its 2024 guidance for revenue of $34 billion to $35 billion; a mid-single-digit margin based on adjusted earnings before interest, taxes, depreciation and amortization, and free cash flow of $700 million to $1.1 billion.
On March 8, JPMorgan Chase upgraded the industrial company to overweight and boosted its price target by $14 to $180.
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Which brings us to March 11, when GE Vernova announced a 50/50 joint venture with Montana Technologies LLC to make air conditioning and atmospheric water harvesting products.
The joint venture will be called AirJoule LLC. GE Vernova CEO Scott Strazik said the venture “represents a strong step forward in reducing energy use and carbon emissions in the air conditioning industry and the future of air-to-water generation."
On the same day, a UBS analyst team headed by Chris Snyder raised the investment firm's price target on General Electric to $191 from $138 and affirmed a buy rating on the shares following GE's investor days.
"While some have balked at valuation in recent months, we continue to focus on [earnings per share] upside and remain drawn to the company’s increasingly attractive positioning across favorable end markets," UBS said in a research note.
UBS's thesis remains unchanged, Snyder wrote, as the firm sees multiyear positive rate of change across all three of GE's business lines.
When combined with impressive execution and a greater than $60 billion revenue base, GE continues to offer the most torque to positive rate of change across U.S. industrials, the analyst wrote.
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