General Electric (GE) completed the separation of its health care unit Wednesday, marking a milestone in its transformation as an aviation-focused company next year. GE stock rose, breaking out of a short base.
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On Wednesday, GE HealthCare Technologies (GEHC) emerged as an independent, stand-alone company after a tax-free spinout. GEHC stock jumped in its trading debut.
GE HealthCare makes machines for imaging, ultrasound and pharmaceutical diagnostics. It boasts an installed base of more than 4 million pieces of equipment around the world.
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GE shareholders received a share in GE HealthCare stock for every three shares of GE stock held.
In a news release Wednesday, GE said it remains on track to launch GE Aerospace as an independent company in early 2024, after spinning off GE Vernova (housing the power and renewables businesses).
General Electric is retaining a 19.9% stake in GEHC stock. GE Chairman and CEO Lawrence Culp will also serve as nonexecutive chairman of GE HealthCare, the release said.
In 2021, the storied industrial conglomerate revealed plans to break up into three separate, publicly traded companies. The big breakup allows GE to focus on its higher-growth aviation unit.
GE Stock
Adjusted for the GE HealthCare spinoff, GE stock closed at 66.31 Tuesday.
GE shares climbed 5.9% to 70.20 in Wednesday’s stock market trading, hitting their best levels since April, after rebounding Tuesday from the 50-day moving average.
GE stock cleared a spinoff-adjusted 67.15 buy point from a flat base.
The relative strength line is at the highest in months, reflecting GE stock’s outperformance vs. the S&P 500.
A 91 Relative Strength Rating means that GE stock has outperformed 91% of all stocks in IBD’s database over the past year.
The GE split, announced in 2021, came after a collapse in earnings and free cash flow for this icon of American industry.
More generally, investors have soured on the idea of big diversified industrial conglomerates.
GEHC stock popped 8% to 60.49 in its trading debut.
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