UPDATE 3-Analysts see risk to GE credit rating, fear div cuts

miércoles 21 de enero de 2009 17:52 CET
 

(Updates stock movement)

Jan 21 (Reuters) - Analysts fear blue chip General Electric Co's (GE.N: Cotización) credit rating may be at risk and that the diversified manufacturer may have to cut its dividend, as a pall of gloom gathers over economies across the globe.

GE shares fell to $12.24, their lowest in more than 10 years, before recovering some of their losses to trade down 3 percent at $12.45 in morning trade on the New York Stock Exchange.

UBS placed a "short-term sell" rating on the stock and removed it from the strategic stock selection list, saying the company might have to raise additional capital.

Goldman Sachs said GE shares were already discounting substantial bad news with its options pricing implying a 50 percent dividend cut in 2010.

"We think industrial cash flow can sustain the dividend in 2009, but acknowledge that an infrastructure rollover in 2010 beyond our forecast could place the dividend and "AAA" rating at risk," Goldman said in a note to clients.

GE officials have repeatedly said that keeping the "AAA" rating, which allows the company to borrow money more cheaply, is a top priority.

Goldman Sachs also cut its price target on the stock by $2 to $15, and lowered its profit forecast for the company through 2010 on concerns of higher losses at its GE Capital arm.

GE Capital was created last July, when the company merged its commercial and consumer finance arms to focus on three regional centers in Europe, Asia and the Americas.   Continuación...