GE spinoff recommended to boost stock
EmptyNEW YORK-- A Citigroup analyst suggested Friday that industrial conglomerate General Electric should spin off some operations, including entertainment arm NBC Universal, to boost its stock price.
A "partial break-up could break (the) deadlock on the stock," Citigroup analyst Jeff Sprague said in a report.
"Despite solid operating performance, GE stock has basically gone sideways for five years," he argued, suggesting that "GE's size and complexity is working against investor interest in the stock and has contributed to further valuation erosion."
Among other factors that have held back GE shares, Sprague cited "NBC underperformance" and insurance setbacks.
His proposed solution: "Spinning off NBC, GE Money and Real Estate could be a game changer" as it would "create a focused infrastructure juggernaut that investors could more easily understand and would likely command a premium (stock) multiple."
NBC Universal would also benefit from a spinoff, according to the Citigroup analyst.
For example, it would be free "to explore consolidation moves that are harder to consider as part of GE," Sprague said without providing specifics on potential acquisition targets.