General Electric (GE:NYE) is actively executing its strategic plan to divest non-core assets and streamline its operations. Continuing in this direction, GE has taken another significant step by reducing its stake in AerCap Holdings (AER:NYE), a leading player in the aviation leasing industry. Through its wholly-owned subsidiary, GE Capital US Holdings, the company has initiated an underwritten public offering, making 40.68 million shares of AerCap Holdings available at a price of $59 per share. This move is set to generate approximately $2.4 billion in proceeds for the multinational conglomerate. This article will highlight the influence of these proceedings on GE stock forecast.
GE’s Stake Transformation:
In 2021, GE made a significant strategic move by acquiring a substantial 46% ownership stake in AerCap Holdings. As part of a $30 billion deal, AerCap Holdings acquired GE’s GECAS business. GE received $24 billion in cash, a 46% stake in AerCap Holdings, and $1 billion in notes. Consequently, This bold move reshaped GE’s position and marked a pivotal moment in its business strategy.
A Series of Stake Reductions:
Following its stake acquisition in AerCap Holdings, GE has consistently implemented its divestiture strategy. In March 2023, a significant move was made when GE decided to sell 18 million shares in the aviation leasing company. This gradual reduction in ownership is in line with the company’s emphasis on its core industrial business. Moreover, the earnings generated from these divestitures are strategically allocated to debt repayment, balance sheet optimization, and the reduction of financing expenses.
Analyst Insights on GE’s Stake:
Goldman Sachs analyst Catherine O’Brien noted that GE owns almost 34% of AerCap Holdings in response to the recent secondary offering. Following the completion of the recently announced offering, GE’s ownership is projected to decrease to around 20%. As GE continues to reduce its stake in AerCap, it’s essential to assess GE stock forecast.
GE Stock Growth:
In 2023, GE’s stock has experienced a remarkable 75% year-to-date increase, driven by investor optimism surrounding the company’s ongoing transformation endeavors.
GE Stock Forecast:
Financial analysts predict that GE stock’s average 12-month target stock price is USD 115.19. This value spans as high as USD 135 and as low as USD 75 for September 2024.
Impressively, GE has garnered a “Strong Buy” average analyst rating. However, the STA analyst’s rating must be taken into consideration, analysts are slightly bearish, influenced by six positive signals and eight negative signals.
As of the last closing, GE’s stock price settled at USD 114.26. Over the past week, the stock price has seen a minimal change of +0.02%. However, over the last month, it decreased by -0.30%. Notably, the stock has exhibited robust growth, surging by an impressive +54.32% over the past year.
Conclusion:
General Electric’s strategic stake reduction in AerCap Holdings aligns with the company’s broader restructuring efforts. GE is selling off non-core assets to focus on its industrial business. Investors are watching their stock, which has shown growth and positive analyst recommendations in 2023.
