Breaking News: General Electric’s Breakup Unlocks Value
General Electric (GE) is making headlines with its recent decision to spin off its power business and begin trading separately as GE Vernova on the New York Stock Exchange under the ticker symbol GEV. This move marks the final step in GE’s plan to break up its operations into three separate entities – health care, aviation, and energy.
Since the health-care spinoff in January 2023, GE’s stock has been on a tear, soaring past $170 from the $60s. Analysts are optimistic about the stock, with 68% rating it a buy and 32% saying it’s a hold. The upcoming spinoff of GE Vernova is expected to drive even more value for investors, with one analyst predicting a 50% increase in share price over the next fourteen months.
The aerospace and defense business, which accounts for about 45% of GE’s current revenue, will continue to trade under the GE ticker symbol and be led by Larry Culp. With a dominant market position in widebody and narrowbody jet engines, GE Aerospace is considered the “crown jewel” of the aerospace industry.
GE Vernova, the energy business, has faced challenges in recent years, particularly in the wind sector. However, the company is optimistic about its future growth prospects. With an expected revenue of $34 to $35 billion this year and forecasted EBITDA margins of 10% by 2028, GE Vernova is poised for a turnaround.
Investors who have owned GE stock will receive shares of the energy business in the spinoff, offering them a unique opportunity to capitalize on the transition to more sustainable power sources. Analysts anticipate strong demand for GE Vernova stock from ESG funds.
Overall, General Electric’s breakup has been seen as a success, with investors reaping the benefits of increased stock prices and analysts predicting further growth for the company’s individual business segments. As GE continues to focus on improving its performance and returning cash to shareholders, many are hopeful for a bright future ahead.
Stay tuned for more updates on General Electric as the company navigates its new path post-breakup.
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