General Electric will likely be removed from the Dow Jones industrial average, according to Deutsche Bank.
As one of the original members of the 30-member index, General Electric has been a component of the Dow for over 110 years.
“We believe the chances that GE could be removed from the Dow are increasing as GE continues to face substantial challenges including earnings and cash pressure, tough global power generation markets, aggressive downsizing, shrinking its portfolio, management shake-up and SEC investigations,” Deutsche Bank analyst John Inch wrote Wednesday. “Apart from GE’s other challenges, as the company’s absolute share price has continued to drop, GE increasingly falls into the category of outlier and consequently a likely candidate for removal.”
Changes to the index are made without ceremony and without warning by S&P Dow Jones Indices and they are not governed by quantitative rules. S&P Dow Jones Indices offered no comment for this story.
GE shares rose slightly in the premarket despite this call as global asset prices rebounded from a two-day slide. A removal from the Dow may not be that bad of a thing anyway as stocks that are removed often tend to outperform.
Source: Investment Cnbc
GE will likely be dropped from the Dow, Deutsche Bank predicts