By Dhirendra Tripathi
Investing.com – General Electric stock (NYSE: GE ) traded 3.5% higher Tuesday after Credit Suisse rated it outperform with a target of $122, up 22% from the current level of $100.
GE’s shares have lost around 14% since the company’s Nov. 9 decision to split into three businesses – healthcare, energy and aviation. The company plans to keep around 20% in the healthcare business.
Analyst John Walsh believes the pullback has created an opportunity for an outperformance in 2022 as GE reaps the benefits of a cyclical recovery in 2022.
“We also see potential for a “rush for propulsion” as airline customers have managed green time throughout the pandemic. In December, GE noted that aviation revenue and FCF (free cash flow) could return to pre-pandemic levels in 2023. We think cyclical recovery and FCF execution will drive the stock higher, despite a “lack of catalyst” narrative into the spinoffs,” Walsh said in his note, according to StreetInsider.
Walsh points out that unlike other large conglomerate simplification, GE has positively revised guidance.
GE is aiming for all three units to have investment grade debt ratings. It said in November it was on course to reduce debt to 2.5 times earnings before interest, taxes, depreciation and amortization by the end of this year, which is the rough rule of thumb for corporate investment grade debt.
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