GE Capital has $20 billion funding gap, Goldman Sachs says

GE Capital has $24 billion debt that will be due in 2019/2020, Ritchie said, citing a GE’s quarterly filing. Meanwhile, the unit expects earnings to be $0 through 2020, and so it has to fill the gap through financing, Ritchie added.

With the company’s liability sitting above industry average level, Ritchie said he remains on the sidelines of the stock with a price target of $9  — 12.5% above its current price.

“We don’t see GE as inexpensive given its leverage profile and tail risk associated with GE Capital,” he said.

GE management has recently been speeding up efforts to reduce debt and increase investor confidence. Larry Culp, who was appointed CEO on October 1, Monday told CNBC that his company has “no higher priority right now than bringing those leverage levels down,” and that he intends to do so by selling assets.

GE Capital is “too big” and has too much debt, Culp said. 

“We’ve been materially shrinking that business down $25 billion this year,” he added. “That work will continue. We’ve got a number of great assets there and it is important that people remember. We’ve got assets that match the liabilities.”

The latest step in the company’s planned $25 billion reduction in GE Capital came on Friday, when it announced the sale of a $1.5 billion healthcare equipment finance portfolio to US lender TIAA Bank. 

And the parent company is also shedding of business units and investments. On Wednesday, GE sped up efforts to sell a $4 billion stake in the oilfield-services provider Baker Hughes. 

GE was down 55% this year.

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