is worth more broken into pieces, and with its split approaching, one analyst recommends buying
Oppenheimer analyst Christopher Glynn upgraded GE (ticker: GE) stock to Buy from Hold, Tuesday.
GE is breaking itself up into three businesses: One dedicated to aviation, another to power generation and a third to healthcare. Valuing the three businesses separately, he arrives at $104 a share for GE stock. Shares closed at $84.66 on Monday.
GE stock was up 1.6% on the positive call.
Dow Jones Industrial Average
futures were down 0.1% and 0.2%, respectively.
Glynn believes that aviation is the most valuable business, worth 13 times estimated earnings before interest, taxes, depreciation and amortization, or Ebitda. Power is the least valuable worth 8 times.
Healthcare is in the middle, worth 12 times estimated Ebitda. GE HealthCare (GEHC) will be the first business separated. It’s due to be spun off to shareholders in the first week of January—less than a month from now. GE shareholders will get one GEHC share for every share of GE they hold.
GE HealthCare management host an investor event in New York City on Thursday to review the business outlook and balance sheet.
With the upgrade, about 68% of analysts covering GE stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P is about 58%. Analyst sentiment has been improving, about a year ago 57% of analysts covering the stock rated shares Buy.
Barron’s wrote positively about GE stock in August, believing that the breakup would generate shareholder value. Since the article appeared, GE shares are up about 14%. The S&P 500 is down about 4% over the same span.
Coming into Tuesday trading, GE shares are down about 10% year to date.
Write to Al Root at firstname.lastname@example.org