With GE Healthcare About To Start Trading, Investors Turn Cautious On Power Business Spin Off

Vandana Singh
·2 min read
6

  • As General Electric Company (NYSE: GE) enters 2023, it will split off its healthcare unit, completing a step in the breakup of the industrial giant.

  • It will face questions about shedding its power businesses for the rest of the year.

  • GE Healthcare Technologies Inc will start trading this week, leaving the conglomerate with jet engines, natural gas-powered turbines, and wind turbine units.

  • The gas and wind turbines will be combined with other GE energy businesses into a new unit GE Vernova that will split off in early 2024.

  • The once profitable power-generation business produced losses and concerns about its future as the world moves toward greener energy sources.

  • The onshore wind-turbine business has struggled with cost inflation and supply-chain problems.

  • Scott Strazik, CEO of GE Vernova, has already reversed the cash flow of the power business, which burned through about $2.7 billion in 2018.

  • It is now cash-flow positive. He is now restructuring the renewables business, which is expected to post a loss of about $2 billion this year.

  • “Within gas power, we’re really on the other side of the journey,” Mr. Strazik said in an interview. For wind, “I see a similar dynamic with gas, where in the first year, you ground yourself. In the second year, you work towards a material improvement,” writes Wall Street Journal.

  • Based on his forecasts for 2024 earnings, the analyst estimates that GE Aerospace could have an enterprise value of $94 billion, while GE HealthCare is at around $48 billion, with GE Vernova fetching less than $13 billion.

  • Price Action: GE shares are up 0.25% at $84.00 during the premarket session on the last check Tuesday.

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