BofA Gives Seal Of Approval To GE Divestitures, Stays Neutral On Stock

General Electric Company (NYSE: GE) move to divest more GE Capital Assets with the sale of supply chain finance unit Trade Payable Services is a solid step, according to Bank of America Merrill Lynch. 

GE announced Wednesday it was selling the TPS unit to MUFG Union Bank for an undisclosed amount.

The Analyst

Analyst Andrew Obin reiterated a Neutral rating on GE and lowered the price objective from $12 to $11. 

The Thesis

The sale of TPS — along with other divestments made late last year — is a good step in reducing its industrial finance and working capital solutions assets, Obin said in a note. 

“We think the announcement should alleviate some investor concerns regarding the quality of GE Capital book up for sale and ability to drive down leverage with the divestitures, as outlined to credit rating agencies,” the analyst said. 

GE announced last year it is paring itself down and plans to focus on aviation, power and renewable energy. In recent years, the company has sold off GE Capital’s Transportation Finance operations and health care assets.

MUFG Union Bank is a subsidiary of a holding company for Mitsubishi UFJ Financial Group, Inc. (NYSE: MUFG).

Price Action

GE shares were trading up by 0.89 percent to $9.05 at the time of publication Thursday. 

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