General Electric: The Healthcare Unit, By The Numbers

Summary:

- On July 20, General Electric will release what are expected to be lackluster Q2 2018 financial results.

- Investors should be excited about the prospect of holding a position in GE Healthcare because this business unit has a promising setup heading into the spin.

- I plan to stay long General Electric. How about you?

General Electric ($GE) is scheduled to release its Q2 2018 financial results on July 20, 2018, and analysts are calling for this industrial conglomerate to report adjusted EPS of $0.17 on revenue of $29.7B. For comparison purposes, the company reported adjusted EPS of $0.28 on revenue of $29.5B in the same period of the prior year.

Anyone that follows GE should not be surprised by the expectations for this company to report a significant YoY decline in earnings but what I do find a little surprising (in a positive way) is the fact that some analysts are actually starting to tone down their bear cases for GE. For example, a notable GE bear, Deutsche Bank’s (NYSE:DB) Nicole DeBlase, recently moved her GE rating from Sell to Hold. She wrote that GE is “taking bold actions to reshape/simplify the portfolio” and that the company’s stock is attractively priced based on her sum-of-the-parts valuation of $16.

There are plenty of reasons why I believe that GE is a buy-to-hold investment at today’s price but I am going to spend a few minutes talking about the upcoming catalyst that has the potential to unlock a tremendous amount of shareholder value in the years ahead – that is, the upcoming GE Healthcare spin-off.