New York CNN Business  — 

Wall Street seems to believe the long-awaited General Electric comeback has finally arrived. But GE’s problems are far from over.

After a horrific performance the past two years, GE (GE) shares have spiked 20% in 2019.

GE is still trading in single-digits and it’s worth just a fraction of its all-time high. But the rally is built on hopes that the worst is over, and it places GE among the top 10% of all S&P 500 stocks this year. If GE were still in the Dow (it was kicked out last summer), it’d be neck-and-neck with Boeing (BA) for the top spot.

New GE CEO Larry Culp deserves credit for taking difficult steps to fix the maker of light bulbs, jet engines and MRI machines. Under Culp, GE slashed its dividend to a penny, sped up its divorce with oil-and-gas giant Baker Hughes (BHGE) and unloaded more assets.

But GE’s earnings report, which is due out before the market opens Thursday, is likely to provide more evidence of how challenging it will be for Culp to pull off a speedy turnaround in a slowing economy. More difficult decisions loom as GE races to fix its debt-saddled balance sheet.

“Larry Culp’s mission is to save GE, regardless of the short-term pain,” John Inch, an analyst at Gordon Haskett, told clients in a note this week. Inch, who has long been warning of trouble at GE, has a $7 price target on the stock. GE was trading above $9 on Wednesday.

‘Show about nothing’

While analysts remain bullish on GE’s booming aviation business, they are still worried that land mines lurk at the slumping power division and the remnants of GE Capital. That’s not to mention the lingering investigations into GE’s accounting by the SEC and the Justice Department.

JPMorgan Chase analyst C. Stephen Tusa, Jr. a longtime GE bear helped spark the rally when he upgraded the stock to “neutral” last month.

But Tusa, who still has a $6 price target on GE, thinks the euphoria is overdone. In a research report published last week, Tusa likened the GE comeback to a “Seinfeld” episode, calling it a “show about nothing.”

Hopes for a GE recovery, Tusa said, have been backed by “almost no hard data or tangible new news.”

GE Capital remains a cash drain

Wall Street got very excited by reports that GE could unload its valuable aircraft leasing division. Sources told Bloomberg News that the business, viewed as a crown jewel of GE Capital, could fetch as much as $40 billion.

But Tusa believes a deal would come “well below” $40 billion and would “wipe out” all of GE Capital’s equity, which JPMorgan estimates is “already zero” because of a huge cash drain created by insurance problems.

In a report last week, Fitch Ratings noted that GE’s aircraft leasing division is built on less debt than GE Capital’s remaining businesses.

“GE Capital’s overall leverage … increases the risk it could be left with excess debt as it reduces assets further,” wrote Eric Ause, Fitch’s senior director of US corporates.

Besides GE Capital’s troubled insurance business, the finance arm has been hobbled by WMC Mortgage, a subprime mortgage unit it shuttered a decade ago.

Last year, GE set aside $1.5 billion to cover a potential Justice Department settlement involving WMC Mortgage. GE has warned it could place WMC into bankruptcy.

Hopes for power to turn the corner

Wall Street hopes for signs of progress at GE Power, the maker of turbines for natural gas and coal power plants. The division has been slammed by the rise of renewable energy. And its headaches were exacerbated by turbine failures last year.

Responding to concerns about its fossil fuels exposure, GE announced plans Wednesday to move its grid solutions and hybrid renewables units into GE Renewables.

“This strategic realignment positions GE to lead in the fast-growing renewable energy market,” Culp said in a statement.

Investors are also anxious to hear more about the timing and structure of GE’s plan to spin off its health care business, which makes MRI machines and other medical products.

Culp has promised to bring greater transparency to GE, which has for years been criticized for complexity that masked decay at the company.

Inch said it would be a “welcome relief” if GE gives more credible guidance after years of “perpetual exaggerations, opaque disclosure and aggressive accounting.”