GE Stock Is More Important Than It's Beef With Siemens Gamesa

In a dispute over patents in the wind power industry for years, General Electric GE +1.02% and Siemens Gamesa Renewable Energy have taken each other to court, but that dispute seems to have concluded. GE stock may rise on Friday, but not because a settlement has been reached.

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In a recent press release, GE announced that a “micamic” agreement had been reached with Siemens Gamesa regarding all of their patent disputes relating to wind turbine technology in the United States and Europe. Under the asserted patent families, both GE and Siemens Gamesa have granted each other worldwide cross-licenses for the lifetime of the patent families, with a cross-license being granted for the lifetime of the patent families.

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The stock price of industrial companies is not usually affected by patent disputes, and it shouldn't be any different with this settlement as well.

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Although it is a victory for both companies and their investors, it still represents a small step toward a better turnaround for both. The wind industry has been suffering due to inflation and fluctuating government support for renewable energy projects.

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There has been a significant decrease in sales year over year for Siemens Gamesa in the fiscal year 2022, with sales dropping 4% over the previous year, meaning it has posted its second consecutive yearly operating loss.

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As of the end of September, Siemens Gamesa had a fiscal year ending. As of the end of that fiscal year, Siemens Energy (ENR.Germany) acquired Siemens Gamesa and thus the wind business under Siemens Gamesa will be reported by Siemens Energy going forward.

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According to General Electric's report for 2022, the company's wind business suffered a loss in 2022 of $2.2 billion, which is greater than the $795 million loss recorded in 2021. The company expects losses in 2023 as well.

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Investors are most interested in the change in price target by Morgan Stanley analyst Joshua Pokrzywinski. He lowered his price target on GE from $90 to $110 a share. As far as his stock rating goes, he remains on the Buy side and believes there is still a lot of value to be unlocked when GE spins off its power division from GE Aerospace in early 2024.

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GE stock was trading at $94.64, following an uptrend of about 45% so far in 2023. Pokrzywinski looked like he had caught a fish or cut bait for his party. GE was trading above the old analysts' price target at $94.64.

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Overall, GE stock price targets have increased about $24 since about three months ago, rising from about $74 to $98. Pokrzywinski is not alone. Most analysts have shifted price targets over the past three months.

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The S&P 500SPX +0.85% has a Buy-rating ratio of about 58%. Two-thirds of analysts covering the stock rate shares Buy as the price rises.

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The Dow Jones Industrial AverageDJIA +0.72% and S&P 500DJIA +0.72% both rose around 0.5% on Friday.