General Electric announced on Friday that it’screating a “simpler, more valuable industrial company” on Friday, announcing thatwill sell its real estate portfolio for $US26.5 billion.
For Barclays analysts, it’s “good riddance” to more GE Capital assets and shows that management is finally listening.
In a note, Barclays wrote that GE is about to become a “pure play global infrastructure company” after shedding most of its GE Capital assets, which would be the seventh-largest bank in the US on its own.
Here’s Barclays (emphasis ours):
“After several years of begging GE to take notice of the new secular realities in the banking business — GE has listened. GE Capital, good
riddance. It’s been north of 10 years of headaches — time for you to go. And going it is. The mechanics will take a bit of time and may be complex but it doesn’t matter. If you
buy a share of GE stock today you know what you are getting. A world-class aircraft engine business, share gaining powergen business, share gaining locomotive business, low risk and cash generating medical business, a few misc other industrial assets that in total are just OK, and for bears — an oil/gas business that we will have to contend with. Overall, versus other industrial peers, I’ll take this business mix all day long.”
The analysts also note that this gives GE more flexibility to spin off business units that aren’t working in the future.
Barclays remains “Overweight” the stock, with a price target of $US32. The stock rallied by over 7% to as high as $US28 per share on Friday.