General Electric Co. (NYSE: GE) may be one of those formerly great companies that lost its way to the point that it might not ever be great again. That’s at least one take, after the conglomerate was downgraded to Underweight from Neutral at JPMorgan. The firm’s Stephen Tusa also lowered his already sub-par $6 price target to $5 in the call.

If Tusa is right, that implies roughly 50% more in downside ahead for GE investors. What matters here is that Tusa was among the first of the large, Wall Street brokerage firm analysts to go negative on the stock, all the way back in May of 2016. He also recently helped Wall Street and the investing community to form a bottom when he raised GE’s rating to Neutral from Underweight just about four months ago during the market panic selling.

Monday’s report shows several key points of weakness, which add up to some rather large negatives. The company’s GE Power and the renewables remain weak, it is expected that GE Capital Services will consume cash for the foreseeable future and its aviation fundamentals are weaker than they might look. GE also is said to be vulnerable to liquidity issues if a recession comes back into play, and the company may need to conduct a potentially dilutive sale of the rest of its health care operations.

Tusa believes that GE’s turnaround will be far more difficult to achieve:

We believe many investors are underestimating the severity of the challenges and underlying risks at GE, while overestimating the value of small positives, and with a 38% move in the stock year to date, and with greater than 50% cuts to forward fundamental free cash flow anchors, we are cutting our price target and moving to Underweight.

What stands out about this call is that it was just in mid-March that GE talked down its 2019 and 2020 guidance. CEO Larry Culp said at that March presentation:

GE’s challenges in 2019 are complex but clear. We are facing them head on as we execute on our strategic priorities to improve our financial position and strengthen our businesses. We have work to do in 2019, but we expect 2020 and 2021 performance to be significantly better with positive Industrial free cash flow as headwinds diminish and our operational improvements yield financial results. We will continue to take thoughtful actions to reduce downside risk and increase upside optionality to create long-term value for our shareholders.

Our own warning at that time also addressed the potential problems if the next recession comes up sooner rather than later, because most companies in turnaround mode right now are not factoring in an outright recession into their business models. With the possibility of a brewing recession in 2020 or 2021 being more widely discussed, though nowhere as severe as the Great Recession a decade ago, what happens to all the turnaround projections at that point?

GE shares had closed on Friday at $10.01, and GE was actually among the standout stocks in the top performers of the S&P 500 so far in 2019. The conglomerate’s consensus target price was $12.54 ahead of this call, and GE shares were down about 6% at $9.38 early Monday after the downgrade.

Monday’s other top analyst upgrades and downgrades included Boeing, Starbucks, Tesla and many more.

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