Shares of GE Light Up Again

Shares of

General Electric


GE 8.49%

bounced back on Friday—but this could be just the beginning of another painful stretch for the industrial conglomerate’s stock.

GE’s stock rose 9.1% Friday, cutting its loss so far this week down to less than 5%—a day after the company suffered its biggest single-day pullback in more than a decade. Shares of GE slid 11% Thursday after an accounting expert questioned the company’s accounting practices.

The company refuted the allegations, and Chief Executive

Larry Culp

bought about $2 million worth of stock, helping to push shares broadly higher.

The rebound isn’t surprising considering GE has long been a retail-investing favorite: The company had once been the U.S.’s biggest conglomerate and Americans are used to seeing its logo on a variety of home appliances, from microwaves to refrigerators to washing machines. Only about 61% of GE’s stock is owned by institutional investors, like mutual funds and hedge funds, below most other big companies, which average around 70%, according to FactSet.

The rebound isn’t surprising considering GE has long been a retail-investing favorite: The company had once been the U.S.’s biggest conglomerate and Americans are used to seeing its logo on a variety of home appliances, from microwaves to refrigerators to washing machines. Only about 61% of GE’s stock is owned by institutional investors, like mutual funds and hedge funds, below most other big companies, which average around 70%, according to FactSet.

At first glance, shares of GE look attractive, trading at a price/earnings multiple of nearly 13 times, well below the average S&P 500 stock, despite rising more than 20% this year.

But shares are down nearly 26% from this time last year. Part of that has to do with the regulators and the Justice Department opening an investigation into potential accounting issues. Shares have also struggled as GE has tried to stabilize its business by shrinking certain units and selling other assets to pay down debt.

Analysts have held off on cutting their GE price targets, with average targets declining slightly to $11.77 a share from $11.83 last month. Still, those targets have been trending lower over the past two years, matching GE’s stock decline.

To be sure, most analysts tend to assign rosy expectations to stocks and GE is no different. Few analysts foresaw the extent of GE’s problems several years earlier except for

Stephen Tusa,

an analyst at JPMorgan Chase & Co. Mr. Tusa says GE shares will eventually fall to $5 apiece—so today’s rally could be short-lived.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

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