Got a tip?:

General Electric Gets a “Perform” Upgrade from Oppenheimer

Shares of General Electric (NYSE:GE) were rising over 4% after receiving an upgrade by Oppenheimer.

The firm upped its rating from “underperform” to “perform” as it cited the company’s plans to spin off segments and improve liquidity.

Oppenheimer analyst Christopher Glynn stated, “We are upgrading shares to perform rating from underperform, based on potential for portfolio plan to unlock some value, and diminish liabilities.”

“GE can reduce net leverage by $25 billion by 2020, from Healthcare liability transfer (debt and pension) allocation of $18 billion gross and meaningful planned liquidity from break-up moves,” he noted.

According to the firm, General Electric (NYSE:GE) is expected to see better performance as its leadership works on breaking of units of the business.

General Electric had recently announced that it would be spinning off its health-care unit and completed the spin off this week.

Kieran Murphy, president and CEO of GE Healthcare, will now continue to lead GE Healthcare as the standalone company.

“GE Healthcare’s vision is to drive more individualized, precise and effective patient outcomes,” Murphy commented.

“We will build on strong customer demand for integrated precision health solutions and great technology with digital and analytics capabilities as we enter our next chapter,” Murphy also said.

GE’s healthcare unit recorded more than $19 billion in revenue in 2017 and posted 5 percent revenue growth and 9 percent segment profit growth in the same year.

The company is expecting to generate cash from the disposition of approximately 20 percent of its interest in the healthcare business and plans to distribute the remaining 80 percent to GE shareholders through a tax-free distribution over the next 12 to 18 months.

CEO John Flannery stated that the company will be focusing on a “simpler, stronger, leading high-tech industrial company.”

GE (NYSE:GE) also has a pending $11 billion merger of its transportation business with Wabtec.

According to Oppenheimer, the pending merger as well as the spin off of the health-care unit should give the company needed money to work with.

Shares saw gains of nearly 8% and their best day since 2015 when Flannery announced that the company would be breaking off its health-care unit and separating its stake in Baker Hughes.

CNBC had asked Flannery if GE would be doing any other moves in its restructuring phase in which Flannery said, “We are finished.”

The company also intends to lower its net debt by 2020 by around $25 billion and generate $500 million or more in cost savings by then as well.

Leave a Comment