General Electric

Why General Electric Stock Dropped 6% Today

Shares of beleaguered industrial giant General Electric (NYSE: GE) were down again in Friday morning trading, falling 6% as of 11 a.m. EST -- and you can thank Deutsche Bank for that.

This morning, the German megabank announced it's cutting its price target on GE stock by more than 36%, from $11 to just $7 a share.

Deutsche Bank explains the bear case against General Electric stock -- and investors are scared. Image source: Getty Images.

So what
Of course, even $7 is only about $0.55 below where General Electric stock is trading right now, so this is hardly a doomsday scenario. But what is it, specifically, that has Deutsche Bank cutting its target in the first place?

In a word: cash. And in three words: free cash flow.

As Deutsche Bank explains, it has run a couple of scenarios on GE stock -- one assuming things will play out as the bank thinks they will, and another "bear case" scenario in which it checks on what will happen to GE if things get really bad over the next few years. The analyst's conclusion is that if things do get bad, then GE could find itself burning cash through the next three years at a minimum -- about $2 billion to $3 billion per year, according to a note posted on StreetInsider.com today.


Sell first, think later: do you ever have heard about this analyst from Deutsche ?

Nicole Deblase, Wall Stree Analyst at Deutsche Bank, specializes in the Industrial Goods sector and covers 29 stocks with a 37.5% sucess rate...average return: -4.4%

ranked #4226 out of 5131 Analyst