Shares of General Electric Co. GE, -0.25% edged up 0.2% in afternoon trading Tuesday, but pared earlier gains of as much as 1.7% to a three-year intraday high, a day before the industrial conglomerate’s investor update. On Monday, the stock had rallied 4.2% to the highest close since May 2018 after The Wall Street Journal reported that GE was near a more-than $30 billion deal to combine its aircraft leading business (GECAS) with Ireland-based AerCap Holdings N.V. AER, -3.60% Analyst Joshua Pokrzywinski at Morgan Stanley reiterated his overweight rating and stock price target of $17, which is 20% above current levels, after the report of the potential Gecas deal, which he believes is a signal that “management could be pivoting to offense, including elimination GE Capital,” including the insurance business. Pokrzywinski said the trimming of pension and long-term-care tail risk could allow GE to engage in more strategic transactions for GE Industrial. “We would view that as a meaningful start to GE moving from a ‘special situation’ to a cleanly valued company,” Pokrzywinski wrote. GE’s stock has climbed 31.5% year to date, while the SPDR Industrial Select Sector ETF XLI, +0.29% has advanced 7.1% and the S&P 500 SPX, +1.91% has gained 3.9%.
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