The iconic company that Jack Welch steered to incredible growth and success continues to struggle, and the shares of General Electric Co. (NYSE: GE) may be in for more trouble Tuesday as yet another Wall Street firm is cutting earning expectations and lowering the price target. While there continues to be growing speculation that Warren Buffett and Berkshire Hathaway are mulling a potential investment, it could be quite some time before they realize a big return on their capital.

In new Stifel research report out Tuesday morning, analyst Robert McCarthy lowers first-quarter earnings estimates to $0.11 from $0.12 per share (the consensus is also at $0.12) and also lowers full-year earnings to $0.95 from $0.98 (the consensus stands at $0.97). In addition, 2019 full-year earnings are chopped to $1.05 (which is in line with the consensus figure) from $1.10.

The analysts model free cash flow at what the call a “charitable” $0.86, much of which will be consumed by the company’s $0.48 dividend. Many on Wall Street feel it could be cut in half again or, in the more draconian models, eliminated entirely. Lastly, the firm’s price target on the stock is slashed to $13 from $15, while keeping a rating of Hold on the shares. The report noted this:

This earnings-per-share reduction is driven by continued challenges at Power, coupled with the expectation for slower overall growth across long cycle businesses and price/cost material inflation challenges. Our target price is lowered to $13 (~12.5X our $1.05; would equate to around 6.5% FCF yield or ~15X 2019 free cash flow). GE has taken great pains recently to “virtue signal” a change in the management and accountability culture at the company. This has included a change in management compensation, appointments to the Board signaling a laser-like focus on capital allocation (Danaher CEO Larry Culp) and transparency (Leslie Seidman, Former Chairman, FASB). Such actions have tried to highlight a change in the strategic narrative and direction of the company.

The Stifel report also focused on the current massive pension obligations the company is dealing with, noting this:

We think such clear action in capping such future payments for high level management would be the appropriate “Virtue Signaling” required in GE’s current Cash priority environment. While we note with any senior management transition there can be large transaction costs (Jeff Immelt had $83 million in pension benefits upon retirement; Jeff Bornstein had approximately $23 million), we would hope current GE management would review such cash intensive supplementary pension benefits going forward, and consider instituting appropriate limits or caps on such cash payments, particularly in light of the serial underperformance of the stock for the last 20 years, a return not commensurate with these benefits.

The bottom line for investors considering buying the stock might be commensurate with the Stifel investment thesis on the company. When addressing the firm’s Hold rating on the shares, the analyst warns of the major overhaul of the portfolio that is underway at GE. Basically, the firm is staying on the sidelines, probably viewing the stock as dead money for some time due to limited upside to the predictions for 2019 industrial free cash flow.

Unless Stifel sees what they consider a more dynamic breakup of the venerable industrial giant, it looks to stay on the sidelines. Even a major investment by Warren Buffet, while providing good headlines for the company, won’t speed up the process of turning the massive ship around.

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