General Electric Company (NYSE:GE)
On Tuesday, Christopher Glynn, an analyst at Oppenheimer, raised his recommendation on GE stock (NYSE:GE), moving it from Hold to Buy.
GE has decided to split itself into three companies: one will focus on aviation, another will focus on power production, and the third will focus on healthcare. After separately appraising each of GE’s three divisions, he concludes that the company’s stock is worth $104 after the split. On Monday, the stock’s price was $84.66 at its closing.
As a result of the excellent call, trade on Tuesday saw GE shares rise by 1.7%. The S&P 500SPX –1.81% and the Dow Jones Industrial Average are currently in the red, with losses of 0.6% and 0.3%, respectively.
According to Glynn, aviation is the most valuable industry, with an estimated value of 13 times more than its Ebitda, which stands for earnings before interest, taxes, depreciation, and amortization. The value of power is eight times lower than any other resource.
The healthcare industry sits in the center and is predicted to be worth 12 times Ebitda. The first firm to be spun off will be GE HealthCare, abbreviated as GEHC. It will be the first week of January, or less than a month from now, that shareholders will get their part of the company. Shareholders of GE will get one share of GEHC for every three shares of GE that they currently own.
On Thursday, officials from GE HealthCare will host an investor presentation in New York City to discuss the company’s financial standing and the future of the industry.
Following the upgrade, around 68% of the analysts that cover GE stock rank the shares as Buy. About 58% of the stocks in the S&P 500 are rated as Buy by market analysts on average. Experts’ opinions on GE stock have been trending upward; approximately one year ago, only 57% of analysts covering GE stock had Buy ratings.
In August, Barron’s published an article favorable toward GE stock, expressing the belief that the breakup will result in increased shareholder value. Since the article’s publication, GE share prices have increased by approximately 14%. During the same period, the S&P 500 experienced a loss of almost 4%.
GE stock was trading nearly 10% down on Tuesday morning compared to where it started the year.
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Author Valerie Remorosa 
