General Electric's Healthcare Spinoff On Track, Says Analyst

RBC Capital analyst Deane Dray reiterated an Outperform rating on the shares of General Electric Company GE and raised the price target from $93 to $$98.
In its first standalone analyst meeting, GE Healthcare reiterated its 2022 metrics, in line with GE’s standing segment guidance, said the analyst. In addition, the business' medium-term targets were mostly as expected.
The analyst thinks the GE Healthcare team looks ready for its upcoming Jan. 3 spinoff date.
Key drivers, including investing in R&D in high-growth areas like AI solutions and Oncology MI/Theranostics, are seen boosting organic sales from ~3% in 2019-2021 to a mid-single-digit percentage over the next 3-5 years.
The analyst said GE Healthcare looks well positioned to improve its growth and margins profile in each of its four segments while capitalizing on precision care trends.
Mentioning the upcoming GE Parent catalysts, the analyst noted exiting/monetizing its remaining 0.4% ownership of Baker Hughes Company BKR over three years using structured forward sales, as well as its 45.4% stake in AerCap Holdings N.V. AER as points to look forward.
The analyst believes GE Digital is now a standalone business that could eventually spin out.
The analyst thinks the COVID-19 pandemic should spur increased investments in remote digital technologies and enterprise software, which should bolster GE Digital’s long-term demand trajectory.
The analyst specified that the next round of asset sales could come from the non-core Power portfolio.
Also Read: Why This General Electric Analyst Is Bullish On Heels Of GE Healthcare Spinoff
Price Action: GE shares are trading lower by 1.61% at $82.29 on the last check Friday.