GE: shares drop after J.P. Morgan downgrade

(CercleFinance.com) - Shares in diversified industrial company GE are down 6.
2% at 9.4 dollars on Monday, making them the biggest faller on the S&P 500 index, after J.P. Morgan downgraded the stock to "underweight" from "neutral".

"We believe many investors are underestimating the severity of the challenges and underlying risks at GE, while overestimating the value of small positives," the broker writes in a note.

J.P. Morgan has also cut its target price on the stock, from 6 dollars to 5 dollars, saying that the Street is significantly over-projecting the bounce in free cash flow in the coming years.

Moreover, the broker believes General Electric Capital Services, the commercial lending and leasing division of the US conglomerate, will "likely consume material cash for the foreseeable future."

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