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General Electric's Healthcare IPO Is Actually Just What The Doctor Ordered

December 29, 2018

Summary:

- General Electric's stock will likely finish the current year down by over 50%.

- However, General Electric has several positive catalysts in place that could help propel the stock price higher, which includes the highly anticipated GE Healthcare spin.

- I am long GE and I plan to stay long for the foreseeable future (so I am obviously talking my book).

 

2018 has been an eventful year for General Electric ($GE) and its shareholders, as this storied company will finish the year with a new CEO, Mr. Larry Culp, and in the midst of major restructuring efforts (not the first time hearing this, right?). As such, it should come as no surprise that GE shares have significantly underperformed the broader market over the last 12 months.

 

Yes, it has been that bad. GE is positioned to spin/sell off several major businesses, including GE Healthcare, and I believe that most of the bad news is already baked into the stock. However, as I described in "GE: It Ain't Goin' Be Easy", it is going to be tough sledding to turn around this large conglomerate, but, in my opinion, Mr. Culp is the right guy for the job. But, it is important to also remember that Mr. Culp and team have some great assets that can be utilized to jump start the recovery process, and it all starts with the GE Healthcare spinoff, in my mind.

 

Therefore, while I agree with many of the points made in "General Electric Healthcare IPO Is Too Risky In This Environment", I believe that the GE Healthcare spinoff is just what the doctor ordered, even in this market. 

 

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