U.S. District judge, Jesse Furman, dismissed most but not all of a shareholder lawsuit accusing General Electric of concealing insurance liabilities and misleading its investors, according to Reuters.
The judge dismissed the fraud claims regarding the alleged misrepresentations of General Electric’s (GE) insurance portfolio and service agreements but allowed the shareholders to continue pursuing other claims, including certain allegations against former Chief Financial Officer, Jeffrey Bornstein.
General Electric paid a $200 million civil penalty in December in response to the Securities and Exchange Commission’s (SEC) allegations that it misled investors about its insurance and power businesses.
In an SEC filing, GE neither admitted nor denied the allegations but concluded that it was in the best interest of GE and its shareholders to “resolve this matter and put it behind us.”
Reuters reports that lawyers for the plaintiffs asked the judge to treat the settlement as an admission of guilt and as proof that GE had misled them. Judge Furman rejected this suggestion.
Barclays analyst Julian Mitchell reiterated his Buy rating on GE last week and raised his price to $13 from $12. This implies upside potential of around 22% from current levels.
Mitchell told investors he believes that GE shares are undervalued based on its Q4 performance and forward-looking guidance. He argues that GE is “well on track to hit Industrial free cash flow of $6B-plus in 2022.”
General Electric receives a Moderate Buy consensus rating based on 9 Buys and 6 Holds. The average analyst price target of $12.21 suggests upside potential of around 14% over the next 12 months.
General Electric scores a “Perfect 10” from TipRanks’ Smart Score tool, which implies that the stock is expected to outperform the market.