Shares of General Electric (GE) are slipping after Deutsche Bank analyst John Inch downgraded the stock to Sell as he believes it is overvalued given "weak earnings quality" and the wide gap between the company's non-cash and cash earnings.

ANALYST SAYS SELL GENERAL ELECTRIC: In a research note this morning, Deutsche Bank's Inch downgraded General Electric to Sell from Hold, saying the stock is overvalued given "weak earnings quality" and the wide gap between non-cash and cash earnings. Inch also noted that General Electric's weak cash flow has become worse in recent quarters, and the company does not appear to be generating sufficient cash flow to sustain its operations. General Electric, which has been divesting assets, could "run out of things to sell," he contended, while its industrial debt has continued to climb. Inch also lowered his price target on the shares to $24 from $28.

LEADERSHIP SUCCESSION: While Deutsche Bank's Inch acknowledged that he anticipates General Electric's leadership to remain in place for the foreseeable future, in the event of a future leadership succession announcement, he cautions the next CEO could opt to "significantly reset" earnings targets lower, possibly closer to actual cash generation. In turn, the analyst told investors that he expects the market could be negatively surprised by this prospective reset.

PRICE TARGET: In afternoon trading, shares of General Electric have dropped over 3% to $27.97.