General Electric maintained its 2018 profit forecast, defying Wall Street expectations of a cut, sending shares higher.
Strength in aviation and health care are shoring up confidence in the outlook for adjusted earnings of $1 to $1.07 a share, GE (GE) said in a statement Friday, just two months after its finance chief said the company was headed toward the low end of the range. Even that would be above the 95-cent average of analyst estimates compiled by Bloomberg.
The steady outlook offered a measure of comfort to investors who are reeling from one of the deepest slumps in GE’s 126-year history. Chief Executive Officer John Flannery, who took over last year, is weighing all options including a breakup as he seeks to turn around the beleaguered maker of jet engines and power equipment.
GE climbed 3% to $14.41 ahead of regular trading in New York. The shares fell 20% this year through Thursday, the biggest decline on the Dow Jones Industrial Average. GE was also the worst performer on the stock gauge last year.
The first quarter was fraught for GE and its shareholders, as the company’s troubles intensified. The Boston-based manufacturer disclosed troubles in a portfolio of old insurance policies in January. About a week later, GE revealed it was under investigation by the U.S. Securities and Exchange Commission over the insurance issue and accounting for unrelated service contracts.
In the first quarter, adjusted profit was 16 cents a share, topping the 12-cent average of analysts’ estimates compiled by Bloomberg. Sales rose 7% to $28.7 billion compared with expectations of $27.45 billion.
The aviation division’s revenue rose 7%, while health care advanced 9%.
Sales fell 9% in the power unit, which is mired in a market slump that’s sapping demand for gas turbines.