GE Stock Soars to Heights Unseen Since the 1990s Ahead of Major Company Breakup

General Electric (GE) is experiencing a remarkable winning streak in the stock market, reminiscent of a boom period not seen since the days of Bill Clinton’s presidency. With the stock up approximately 4% for the week and on track to achieve its 11th consecutive week of gains, GE is revisiting a level of success last observed in November 1996, marking its longest weekly winning streak in over 27 years.

This surge in GE’s stock is attributed to a confluence of positive factors, including a robust earnings report in January, strong guidance on free cash flow, and the highly anticipated breakup of the company into GE Aerospace and GE Vernova, set for April 2. The latter will focus on GE’s power-generation businesses, signaling a strategic shift aimed at maximizing value for shareholders.

The aerospace sector’s dynamics, particularly Boeing’s challenges in increasing plane production, have inadvertently benefited GE by prolonging the service life of older aircraft. This trend has enhanced demand for parts and services, a niche where GE excels. Supporting this outlook, recent fiscal third-quarter earnings from AAR, a key player in the aftermarket parts and services industry, have further underscored the potential for GE’s aerospace division.

Analysts have taken a positive stance on GE and other companies positioned to benefit from the aerospace aftermarket’s strength, with AAR’s performance offering a promising indication for GE’s business prospects. Despite a temporary dip in AAR’s stock post-earnings, analyst sentiment remains high, with a consensus view that supports robust growth and profitability for the sector.

As GE prepares for the upcoming spinoff, the trading community is closely watching the “when issued” trading of GE Vernova stock, expected to commence around March 27 under the ticker “GEV.” This event will provide investors with a preliminary valuation of the new entity, offering insights into the future trajectory of both GE Vernova and GE Aerospace. Preliminary estimates suggest a valuation of around $100 per share for GE Vernova, with implications for the valuation of GE Aerospace as well.

The impending split and the trading of GE Vernova shares represent a pivotal moment for GE, potentially influencing the company’s stock performance in the weeks to come. As investors and analysts alike anticipate the effects of this strategic reorganization, GE’s recent stock rally underscores the market’s optimistic outlook on the company’s direction and the value proposition of its constituent businesses.

With GE’s stock significantly outperforming the S&P 500 over the past year, the company’s current trajectory is not just a reflection of its operational success but also a testament to the strategic initiatives set to reshape its future.

Sources: AirGuide Business airguide.info, bing.com, dowjones.com