© Reuters. General Electric (GE) Healthcare Spin-Off a Positive Catalyst For GE Shares – BofA
By Sam Boughedda
General Electric Healthcare (NYSE:) submitted its Form 10 after market close on October 11, with the prepared spin-off anticipated in the very first week of January 2023.
Following the news, BofA experts stated the company thinks there are positives from the health care spin-off.
“We view the Healthcare and Vernova (Power & Renewable; planned for early 2024) spins as positive catalysts for GE shares. However, in the near term, we expect earnings to be challenging,” composed the experts, including that BofA keeps its Buy score and $105 rate target on the stock.
They included that they think the filing counters financier issues that Healthcare has actually underinvested in R&D.
“R&D spending has been steady at $0.8bn/year (7-8% of revenue). In fact, 21% of 2021 orders were for products introduced in last year. Software platforms have scale, generating $1.2bn of revenue (7% of total) in 2021. The Ultrasound and Pharmaceutical Diagnostics (PDx) segments are highly profitable franchises, while Imaging faces a tougher set of competitors, in our view,” they included.
The experts likewise went on to state that margin healing appears possible in 2023.
“To be clear, we expect continued supply-chain pressures in 3Q22. With price/cost turning positive in 2Q and the PDx plant in Shanghai back at full capacity, we are optimistic about the margin recovery over time.”