General Electric Company (NYSE:GE) Could Double in Price by 2020

October 18, 2016

Nick Heymann, Co-Group Head at William Blair & Company, says General Electric Company (NYSE:GE) is the only company in his diversified industrial manufacturing universe that has the potential to double in price by 2020 to around $60 a share. He discusses the key elements supporting this belief.

The first is the acceleration of GE’s digital and data analytics, both as an internal productivity driver but especially as an immensely profitable provider of standalone software, real-time data and predictive analytics to other companies. GE Digital’s external sales in 2016 should reach an estimated $6.5 billion and are targeted to grow to $15 billion by 2020.

The second factor is faster organic sales growth, which we believe can expand to 6% to 7% from 2017 onward versus 2% to 4% expected in 2016.

The third catalyst is upside sales and earnings growth from Alstom Energy. GE completed its $10.4 billion acquisition of Alstom Energy in November 2015. Since then GE has been accelerating the integration of Alstom Energy by pulling forward much of the targeted 2017 and 2018 restructuring initiatives into the first half of 2017. GE has also been able to significantly increase the organic growth of Alstom Energy’s backlog; it was up 22% in the first eight months after it was acquired through the middle of this year, and we believe will be up substantially more by the end of the third quarter of 2016 from year earlier levels.