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General Electric (GE) stock is now slowly on the rise as its healthcare arm has started to recover following some stabilization of the COVID-19 situation in the world.
Whether it’s a health company or a different company with some interest in health, outfits like these have struggled for demand in the last few months. This demand increased because of the coronavirus pandemic, which ravaged the world and made healthcare workers some of the most sought-after. As many biotech companies have had what can be described as a good run so far, General Electric Company (NYSE: GE) stock is also rising as its health care unit is doing pretty well.
General Electric (GE) Stock
Currently trading at $8.40, General Electric (GE) stock is now up over 6% from its previous close at $7.88. The company has not had a great year so far, as it has lost nearly 27% in 2020 and about 19% in the past 12 months. However, in the last one month, General Electric stock has climbed over 32% and 20.56% in the last five days.
The need for health care workers during the ongoing coronavirus pandemic did not exactly translate to a boom in the health care sector. This is because many businesses, as well as hospitals, saw a significant reduction in patronage. These hospitals also postponed all elective procedures until further notice. This decision affected GE because a lot of these elective procedures would have required technology from the company.
The advantage GE had was that there was an increase in the company’s ventilator demand. During the worst of the pandemic, a lot of ventilators were needed as people struggled to beat the virus, which caused respiratory problems. However, this was not enough to keep GE stock healthy as the ventilators only make up a small portion of its income.
“Demand trends are improving faster than expected…China in particular seemingly [has] largely normalized.”
The analyst now largely believes that as things go back to normal, General Electric stock has a good chance at an increase.
General Electric runs GE Aviation and GE Power along with GE Healthcare. However, the Healthcare arm has dwindled significantly over time. Last year, GE agreed to sell the biopharma division of its Healthcare business to Washington-based Danaher Corporation. This deal closed for over $20 billion. Before then, GE Healthcare made up 39% of the company’s total operating profit, and almost 21% of its total sales.
To keep General Electric on track, Kaplowitz says that the company has to streamline its business as much as possible. The analyst also suggests that GE might have to significantly minimize risks as well. In the medium to long term, at least till the end of 2020, General Electric stock could still rise higher. Kaplowitz wrote:
“De-risking [and] simplifying the company remains a high priority and one on which we think meaningful progress is underway. Longer term, GE’s runway for improving results in 2020 and beyond, could be more significant than we think some investors appreciate, given what appears to be an increasing focus on fundamental changes to operational and management practices.”
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