(Bloomberg) -- General Electric Co. shares sank in early trading after two analysts sounded more alarm bells around the company’s liquidity, and a report said former GE employees were being questioned by federal investigators about its troubled insurance business.

Deutsche Bank analyst Nicole DeBlase slashed her price target on the stock by more than a third amid continuing questions on the beleaguered multinational’s liquidity outlook. J.P. Morgan’s Stephen Tusa, a long-time bear on the company, said commentary from GE’s partner Safran SA supported his view that profit and cash flow growth at the aviation segment would be below consensus expectations.

The other blow came as the Wall Street Journal reported that several former GE employees have said the company’s insurance business failed to internally acknowledge worsening results over the years. The employees also said that they were interviewed by government lawyers.

Shares fell as much as 3.7 percent in pre-market trading in New York. The stock has remained below $8.00 per share over the past two weeks, a level it hadn’t seen since March 2009.

In analyst DeBlase’s base case model, GE will likely be able to build up its balance sheet next year with cash flow from its industrial units to around 34 cents a share, assuming economic headwinds don’t worsen in the next three years and debt comes down, she said. Still, the scenario supports a lower price target on the stock, prompting a cut to $7.00 from $11.00, compared with the average of $11.38 according to data compiled by Bloomberg. She rates the stock a hold.

A more bearish case assumes earnings at the power unit continue to decline and GE’s other business units are hit by a modest downturn. DeBlase sees the industrial units facing a cash burn of about 21 cents per share next year. Yet she doesn’t see the company facing a liquidity crisis, “even in this drastic scenario.”

(Adds JPMorgan comments, probe details; updates shares.)

To contact the reporters on this story: Courtney Dentch in New York at cdentch1@bloomberg.net;Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Steven Fromm

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