GE Investors Trickle Back as Year of Transformation Starts

(Bloomberg) -- The new year started on the right note for General Electric Co. investors, with shares of the industrial manufacturer sharply outperforming the broader market on the first trading day of 2019.

The gain, to the stock’s highest level in nearly a month and a half, may prove to be short-lived relief for GE’s management. They’re facing a tough few months as they push to whip the company into shape by divesting non-core businesses, fix liquidity issues and get its troubled power unit back on track. As the announcements start coming in, the company’s shares may begin inching back after 2018’s staggering 57 percent plunge.

GE Investors Trickle Back as Year of Transformation Starts

“The long-term story is focused on the reorganization of the company,” Edward Jones analyst Jeff Windau said in an email interview. “Today’s price move is more of a short-term issue, as some value investors are stepping back in with the start of the new year,” he added, noting that the company’s fourth-quarter earnings report later this month will be the next key data point.

Hard numbers might be the last thing the market will be watching for during the quarterly results, however, with analysts and investors hungry for more details on the divestment plans already underway, and what more the company has planned. “Moving forward in 2019, execution on the strategy is extremely important for investors to watch,” Windau said. Strategy components to be watched closely include GE’s merger of its transportation business with Wabtec, more information on its healthcare unit and further plans on Baker Hughes.

GE shares gained as much as 7.9 percent on Wednesday, marking three straight days of gains. The stock is also the top gainer on the S&P 500 Index, which dropped as much as 1.6 percent earlier amid concerns about Chinese manufacturing data and global growth.

©2019 Bloomberg L.P.