The company’s shares are up nearly 50% year to date.
Things have been looking good for General Electric ever since the company’s success at the Paris Air Show. The company’s Aviation unit is bringing in new orders for its LEAP engine. And GE continues to regain investor confidence as its shares edge back toward its 2019 high.
The company’s shares are up more than 34% in 2019 but they’re still down more than 27% from a year earlier. So investors are divided over whether GE will be able to maintain this momentum going forward.
Will this momentum continue for the rest of 2019?
This week, William Blair analyst Nicholas Heymann held his outperform rating on GE. He seemed optimistic about a number of different factors concerning the company. Here is the case for GE’s continued growth during the second half of 2019.
GE has a new CEO
Toward the end of 2018, GE brought on Larry Culp as the company’s new CEO. Many investors were surprised but Culp has had success turning around other companies so most supported the change. However, the stock still plunged about 37% by the end of the year.
Then Culp made a series of strategic moves that helped turn the company’s shares around. First, he sold a portion of the company’s healthcare business which helped alleviate concerns about GE’s debt load.
Then in June, Culp outlined a definitive plan for the company. Heymann largely credits GE’s stock rally in 2019 to Culp.
The success of GE’s Aviation unit
GE continues to find success with its Aviation unit and this is the company’s largest revenue driver. In June, GE attended the Paris Air Show and signed a number of lucrative contracts.
The Aviation unit focuses mostly on building and servicing aircraft engines. Its LEAP engine was impacted by the grounding of the Boeing 737 Max, though the company has managed to work around this.
Some analysts have suggested that GE’s Aviation unit may be worth up to $100 billion. So this will be the biggest segment of the company to focus on going forward.
Things to keep in mind
GE continues to make improvements and there are many reasons to be optimistic about the company. However, 2019 will be a rebuilding year for GE so there could still be quite a few bumpy roads ahead. Investors are looking ahead to the company’s second-quarter earnings report, which is due on July 31.