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Oct 1 (Reuters) - Deutsche Bank lowered its earnings outlook and price target on General Electric Co (GE.N), citing deterioration at the company’s GE Capital unit, due to tighter credit markets, asset shrinkage and debt pay-down.
The brokerage cut its 2008 earnings estimate on GE by 9 percent to $2 a share and expects a further decline in 2009 earnings to $1.95 share.
For the third quarter, Deutsche Bank expects GE to earn 45 cents a share, after the company cut its earnings outlook last month to a range of 43 cents to 48 cents a share, from 50 cents to 54 cents a share projected previously.
Analyst Nigel Coe said in a note to clients that the third-quarter estimate reflects a 28 percent drop in GE Capital’s earnings to $2.1 billion, weighed down by an expected $300 million to $500 million of market losses and lower real estate gains.
“However, it is unlikely that GE will report earnings outside their guidance range given the proximity of the revision to 10 October, although we see a clear bias towards the lower end of the 43-48c range,” Coe said.
The analyst also cut his price target by $2 to $26 on valuation.
Coe also expects the company’s earnings to drop next year due to a further 14 cents a share fall in GE Capital’s earnings, primarily due to asset shrinkage and de-leveraging.
Shares of GE closed at $25.50 Tuesday on the New York Stock Exchange. (Reporting by Adheesha Sarkar in Bangalore; Editing by Anil D’Silva)