General Electric shares rallied Wednesday after longtime analyst Jeff Sprague raised his rating on the embattled industrial conglomerate’s stock to buy.
It’s the first time in more than a decade that he’s recommended clients purchase the stock.
“After 10 years on the sidelines we are upgrading GE to buy,” the Vertical Research Partners analyst said. “We see a path to create equity value.”
“It took GE at least 20 years to dig this hole and it will not get out in a year or two. … While the work ahead is still hard, we think the lack of investor confidence will slowly subside,” Sprague added.
GE shares climbed 7 percent Wednesday morning. Vertical Partners also raised its GE price target to $11 a share from $10 a share.
Sprague has been a Wall Street analyst for more than 25 years, specializing in industrial research at firms such as Citigroup and Cowen before founding Vertical Partners.
Just before the financial crisis, Sprague in 2007 warned that GE’s “size and complexity is working against investor interest.” GE’s worth had begun to slide at the time, after peaking near $600 billion in August 2000 as one of the most valuable companies in history. Sprague recommended that GE spin off several business units and assets to downsize, or else face “further valuation erosion.”