General Electric remains 'most expensive value trap ever,' says JPMorgan - InvestingChannel

General Electric remains ‘most expensive value trap ever,’ says JPMorgan

JPMorgan analyst Stephen Tusa cautions investors against interpreting General Electric’s Q1 pre-announcement and unexpected bond issuance as an “all clear,” calling the stock “still the most expensive value trap we have ever seen.” While the stock is down, so is free cash flow by over 100%, while leverage has gone up, meaning that GE is in “an arguably worse position on Industrial fundamentals today” than the company was in 2008 and 2009, Tusa contends. The collapse he expects in Aviation could be viewed as cyclical, but history suggests such a collapse would be less a temporary, unique event than an example of a competitive long cycle business that exploits a near term trend “to an unsustainable peak” then quickly goes from over-earning to normal and rarely comes back. Tusa maintains a Neutral rating on GE shares with a price target of $5, down from $6.