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Shares of General Electric Co. rose to a nine-month high on Friday, after the BofA Securities analyst raised its price target to 18%, amid more optimism on the industrial conglomerate’s healthcare business as COVID-19 cases increase globally.
GE stock,
reversed a prior intraday loss of nearly 0.8% to rise 2.7% in the afternoon to $ 10.89. This would mark the highest close since March 4.
GE’s stock has now risen 69.6% in the past three months, enough to make it the XLI of the SPDR Industrial Select Sector exchange-traded fund,
best performance over this period, and the SPX of the S&P 500 index,
second best performer. By comparison, the industrial ETF has advanced 14.6% in the past three months and the S&P 500 has jumped 7.7%.
BofA’s Obin reiterated the buy note he had on GE since Jan. 29 and raised his price target from $ 11 to $ 13. The new target implies a gain of 19.4% over current levels. The stock last closed above $ 13 on February 12, about a month before the World Health Organization declared the COVID-19 outbreak a pandemic.
Obin’s more optimistic view follows a presentation Thursday by Kieran Murphy, CEO of GE Healthcare. Murphy said he believes the healthcare industry will “end a good year here,” given COVID-related demand from ventilators and monitors, and the return of pharmaceutical diagnostics volumes in the fourth quarter.
“I would say, look, overall we’re seeing a return to somewhat more stable markets, higher digitization rates,” Murphy said, according to a transcript provided by GE. “Hospitals, remember, are increasingly resilient in how they build their capacity to meet pent-up demand in oncology and cardiology, for example.
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This led Obin to increase his overall estimate of GE’s 2020 earnings by one penny per share to 3 cents, and his estimate of 2021 EPS to 35 cents from 34 cents.
“The recovery in pharmaceutical diagnostics (PDx) and ultrasound continues,” Obin wrote in a note to clients. “The outlook is also supported by the growth of the order book… and stable trends in scans / machines.”
The fact that GE Healthcare has noted some benefits of the COVID-19 pandemic may broaden the appeal for investors. The action had advanced ahead of GE’s third quarter report in late October, with some analysts touting the company to be heavily exploited by a COVID-19 vaccine, given its exposure to the aerospace sector.
Read also: GE shares rebound after analysts turned bullish on growing confidence in the aviation recovery.
See related: What we still don’t know about COVID vaccines after UK emergency use clearance from candidate Pfizer-BioNTech.
But as Obin noted, COVID-19 has also accelerated adoption of Edison, GE’s healthcare software platform.
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