GE Stock Set For Best Day in Years After Danaher Deal

GE sold its biopharma business to Danaher for $21.4 billion

Managing Editor
Feb 25, 2019 at 9:26 AM
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The shares of General Electric Company (NYSE:GE) are soaring this morning, up 16.9% in electronic trading, after the industrial conglomerate sold its biopharmaceutical business to medical equipment maker Danaher (DHR) for $21.4 billion. GE's current CEO, Larry Culp, was the former head of Danaher. 

Should today's pre-market gains hold, it would mark General Electric stock's biggest one-day gain since March 2009. when the shares added 19.7%. Since bottoming at a nine-year low of $6.66 on Dec. 11, the former Dow name has fought back to add 53% as of Friday's close at $10.17. Put another way, the equity has only turned in one weekly loss since then.

Analysts have yet to come through with any bull notes, but there is plenty of room to do so. Exactly half of the 14 brokerages in coverage rate GE a tepid "hold," and it's consensus 12-month price target of $11.91 sits right near the stock's expected open today. 

In the options pits, the security's 10-day put/call volume ratio of 0.91 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks 3 percentage points from an annual high. While this indicates that bought calls have outnumbered puts on an absolute basis, the elevated percentile ranking tells us option buyers have purchased GE puts over calls at a faster-than-usual pace in the past two weeks.

Meanwhile, the stock's Schaeffer's Volatility Scorecard (SVS) stands at a 79 out of a possible 100. This means GE has tended to make outsized moves over the last year, compared to what the options market had priced in -- a potential boon to premium buyers.

 

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