GE Stock Loses a Skeptic. But He Isn’t Quite in the Bull Camp.

The development of vaccines has probably been the most important factor in GE’s recent rebound.

Sebastien Bozon/AFP via Getty Images

Stock in General Electric didn’t get another bull. It did, however, lose a bear who took his price target up more than 100% on Wednesday.

DZ Bank analyst Robert Czerwensky upgraded shares of General Electric (ticker: GE) to Hold from Sell. His price target is now $11 a share, up from $4.90.

Czerwensky has been a skeptic for a while, rating shares Sell since late March 2018, when GE stock was trading at about $13 a share. He has stayed bearish as the company cycled through a couple of CEOs, landing on Larry Culp—the first CEO brought in from outside in the long history of GE.

There are many reasons to start being more bullish after a difficult stretch caused by prior management decisions and global economic realities. But Czerwensky’s analysis isn’t clear because he is based in Germany and declined to send his research report, citing company policy.

Among recent positives are Covid-19 vaccines. GE is a large aerospace supplier and demand for commercial air travel has been hammered by the pandemic—something far beyond the company’s control. The development of vaccines has probably been the most important factor in GE’s recent rebound. Shares are up 61% over the past three months. Boeing (BA) shares, for comparison, are up 36% over the same span.

Culp has worked to pay down debt—something in the company’s control. That has necessitated selling assets and striking an unusual pension funding deal. The company announced on Tuesday it has purchased an annuity from insurance provider Athene (ATH) that will pay the benefits of about 70,000 retirees.

Nothing really changes for retirees. Benefits remain the same. Pension checks, essentially, come from Athene instead of GE. But the deal reduces risk for GE in one small way, by shrinking the total pension obligation.

GE reports on pension funding in its annual report. At the end of last year the company recorded about $95 billion in pension obligations and $72 billion in assets held by the pension funds. That gap is a little like debt. And the annuity contract takes the $95 billion debt obligation down by about $1.7 billion. The annuity is purchased with pension assets, so the $72 billion drops too. A smaller pension, however, is less risky for any company.

Consider that GE’s $95 billion pension obligation is roughly the same as its market capitalization. That means a theoretical 15% drop in pension assets could wipe out 10% of the market value of GE stock, all else being equal. The same calculation for Honeywell International (HON), for comparison, reduces its market capitalization by less than 2%. Honeywell’s pension obligation—relative to its equity value—is smaller than GE’s. Honeywell’s pension obligations total roughly $25 billion. Its market cap almost $150 billion.

GE announced earlier this month that it added $2.5 billion into the pension plan.

Shares were down 1.4% to $10.96 near midday. The S&P 500 was up 0.2%, while the Dow Jones Industrial Average was off 0.1%.

GE Shares rose 2.6% Tuesday, so the was holding on to some of the gains. The stock is about a dime higher than it was before the pension actions and the upgrade.

Write to Al Root at allen.root@dowjones.com