When General Electric Co. (NYSE: GE) reported earnings slightly ahead of expectations on Friday morning, there may have been some who were concerned that revenues were slightly lower than expected. As we have warned over and over, GE is about to be a lot harder for analysts to understand due to its disposition of consumer finance, appliances sale and acquisitions in the hopper. 24/7 Wall St. is again reminding readers to expect another two or even three quarters of potential noise from analysts while the business normalizes into an industrial conglomerate.

Periods of transition can be confusing, but they can also bring opportunity. That is the take here, and we have in hand two key analyst reports after GE’s earnings report calling for GE to rise handily ahead. Merrill Lynch has a Buy rating and $29 price target, while Credit Suisse has an Outperform rating and $30 price target.

GE trades at 13 times the Merrill Lynch 2016 earnings per share (EPS) targets and 13.7 times the 2015 EPS targets. The Merrill Lynch report was actually positive on consumer credit, noting that GE beat on taxes and was operationally in line in industrial and GECC. The team noted that equipment orders showed a strong rebound across key segments, despite headwinds in power and water. Aircraft was particularly a help.

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Merrill Lynch’s team said:

Our analysis indicates that over the last two decades GE’s stock performance has closely tracked the company’s ROE. We forecast it to improve over the coming years due to: 1) improving performance at GE Capital, 2) greater contribution from high margin service businesses (Aviation), 3) improved pricing in later cycle industrial businesses driven by natural gas such as Power and Oil & Gas. More regulatory visibility at GE Capital likely means that GE will be able to comfortably grow its dividend.

Credit Suisse’s first take is that GE saw good margins and better equipment orders. The firm did see a miss in the Industrial segment, with organic growth of 4% versus the firm’s 6% forecast. Credit Suisse indicated that GE’s fiscal year 2014 operating framework appears unchanged. Also, the decent order flow and industrial margin performance should support GE shares.

Other segment observations from Credit Suisse were as follows:

• GE reiterated that it expects FY14 Industrial organic sales growth to be at the higher end of the 4% to 7% target range. Orders were strong, with equipment/services orders up by 31%/10%.
• Oil & Gas equipment orders in particular should be reassuring after three successive quarters of declines.
• Pricing in the order book was positive in Power & Water, after a flat second quarter.
• Improved Industrial margins by 90 basis points.
• GECC earnings were 3% above the firm’s estimates.

GE shares closed up 2.35% at $24.82 on Friday, against a 52-week range of $23.69 to $28.09. This still leaves an implied 20% upside over the next year or so, if the analysts are right. Then there is also that dividend yield that is north of 3.5% to consider, on top of the expected price gains. Also GE investors are expected to benefit from the final distribution of Synchrony Financial in 2015.

The consensus analyst price target from Thomson Reuters is currently $29.25. The highest analyst target price is $32.00. We will be looking for updated analyst calls on GE next week as well.

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