GE HealthCare is on the verge of becoming an independent company, and investors are eager to know where their stock should be trading. GE HealthCare held a meeting in New York City with analysts and investors this week to cover the details. The new company will have about $18 billion in value, $2.7 billion in operating profit for 2022, and $1.8 billion in cash. They will also owe roughly $10.2 billion in long-term debt, leaving them with a net debt of about $8.4 billion.
According to Barron's in August, the value of the entire GE HealthCare business is estimated at $55 billion. After the separation, they will have 455 million shares outstanding, and it looks like the stock price should be around $103. This could be compared to Siemens Healthineers, which trades for roughly 16.3 times the estimated 2022 Ebitda. If it were to help up to similar standards, GEHC would trade for about $128.
CEO Peter Arduini believes his new company will be successful due to the energy and commitment of the 50,000 employees. A significant amount of product managers and commercial leaders have been upgraded under Arduini's leadership, and he is pushing for stock ownership from thousands of people within the company. He feels that as a stand-alone entity, employees will have more ownership and value to the results rather than being part of a division inside General Electric.
Overall, investors have a positive outlook come January 4th when the stock GEHC officially begins trading on the Nasdaq stock exchange. It will be interesting to see how the market responds to the separation and the potential value that GE HealthCare has to offer. While there have been some hiccups with GE stock in the past, one can only hope that the same doesn't distinguish GEHC when it is trading on its own.