) to buy from strong buy.
Analyst Nicole Parent says in all, the company beat operating profit that it forecast, but she says she's concerned about the composition of the results, which were quite different than she expected. Parent notes the biggest variances vs. her forecast: Medical (worse), Materials (worse) and Power (better). Segment operating profit grew 14% but excluding Power, profit declined 17%. Long cycle operating profit grew 35% in the first quarter (excluding Power, long cycle operating profit fell 14%).
Parent cut her 2002 EPS estimate to $1.65, and trimmed her 2003 estimate to $1.80, to reflect lower Medical growth Bottom line, Parent says her confidence in GE's ability to offset a Power downturn is not as strong. She cuts her target to $36. Parent thinks the main issue for GE remains relative EPS growth coming out of a downturn.