GE Climbs On Q1 EPS Beat, Helped By Industrial Business, Cost Cutting

General Electric (GE) was gaining ground on Thursday, after reporting a better-than-expected  bottom line result in the first quarter.

The conglomerate reported earnings of $3 billion, or 20 cents a share; operating earnings were 33 cents a share, down from 39 cent a share a year earlier but ahead of the 32 cents analysts had forecast. Revenue slid 2.2% to $34.2 billion, almost meeting consensus of $34.3 billion.

The firm's GE Capital and real estate operations were the main culprit for the decline: Revenue from GE Capital slumped 8.3% while its real estate arm saw sales plummet 62% year over year.

By contrast, GE's industrial business logged an 8.3% gain in sales: The oil and power segment saw revenue climb 27% and its power and water business jumped 14%.

GE also said it is on track to meet its goal of $1 billion or more in cost cutting this year.

S&P Capital IQ analyst J. Corridor reiterated a Buy rating on the stock, and raised his target price by $2 to $32, reflecting his "view that industrial, infrastructure and financial performance will benefit from an expanding U.S. and global economy. GE Q1 operating EPS of $0.33, vs. $0.39, was a penny better than our estimate. Order flow in industrial segment was strong and infrastructure backlog remains robust. We think traction on restructurings was good, and expect operating margin expansion through ’14 and ’15."

Morningstar's Daniel Holland also maintained his bullish stance on the stock and $29 fair value estimate: "Pre-tax, pre-provision income was down nearly 11%, with ending net investment down 7% over the same period. This performance is consistent with management's stated intention to shrink the business and in our opinion, moat-enhancing. Within the quarter GE completed the initial regulatory filings for the spinoff of its North America Retail Finance business, to be named Synchophony. GE will retain 80% of the ownership stake in Synchophony and will use all of the proceeds to support the business. As a result, we anticipate the transaction will be slightly dilutive to 2014 earnings, although once GE relinquishes the remainder of its stake, the company will likely return cash to shareholders."