Analyst Note
| Joshua Aguilar |We maintain our discounted cash flow-derived fair value estimate of $131 per share for General Electric following the news that the conglomerate will separate into three public companies. We think this news is an important catalyst that will help close the persistent price/value gap for the stock, second only to the company hitting its target of high-single-digit free cash flow margin by 2023, which we think is tantamount to the GE story. Nonetheless, investors should cheer the news that management has committed to this target by 2023, as opposed to “2023-plus,” as it had previously communicated. Additionally, investors will now have the opportunity to own either or both exceptional franchises in aviation and healthcare without having to hold on to GE’s more challenged businesses.