The shares of General Electric rose 3.5 % on Tuesday after Credit Suisse upgraded it to outperform with a target price of $122, up 22% from its current price of $100.
Since the company's Nov. 9 announcement to split into three divisions — healthcare, energy, and aviation – GE's stock has dropped roughly 14%. The corporation intends to preserve roughly 20% of its healthcare assets.
As GE reaps the benefits of a cyclical recovery in 2022, analyst John Walsh feels the retreat has created an opportunity for outperformance in 2022.
"As airline passengers have managed green time during the pandemic, we see the potential for a "rush for propulsion." Aviation revenue and FCF (free cash flow) could return to pre-pandemic levels in 2023, according to GE. Despite a "lack of catalyst" narrative into the spinoffs, we believe cyclical rebound and FCF execution will drive the stock higher," Walsh stated in his note, according to StreetInsider.
GE, unlike other large conglomerates, has positively altered guidance, according to Walsh.
All three GE businesses are seeking investment-grade debt ratings. It claimed in November that by the end of the year, it will have reduced debt to 2.5 times earnings before interest, taxes, depreciation, and amortization, which is the industry standard for corporate investment-grade debt.