GE completes split into three independent companies

General Electric has finalized its restructuring, separating into three distinct publicly-traded companies. The newly independent entities, GE Aerospace (GE) and GE Vernova (GEV), now trade individually on the New York Stock Exchange. GE Vernova will concentrate its efforts on energy transition solutions, while GE Aerospace specializes in aviation manufacturing, and GE HealthCare focuses on developing medical technology.

Yahoo Finance's Josh Lipton and Julie Hyman break down the details.

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Editor's note: This article was written by Angel Smith

Video transcript

JOSH LIPTON: GE Aerospace and GE Vernova now trading as two separate stocks. So GE Aerospace, that's traded under the ticker GE. Then you have GE Vernova, that's going to be specializing in energy generation, said it's going to generate mid-single digit organic growth and adjusted EBITDA margin 10% by 2028. By the way, the team at JP Morgan Julie says they initiated coverage of GE Vernova, says-- initially with a neutral rating, but do say, this is, in fact, a core long-term holding for investors who want exposure to the electrification trend. So if you're interested, that's the way to play it--

JULIE HYMAN: It's interesting to see the stock fall by the end of the day because it was higher for a lot of the session here. This spin off was effective. So just to help people wrap their minds around this, GE Healthcare spun off before. That happened I believe in 2022 even. So that company already existing. It's around a $40 billion company. Peter Arduini is the CEO there at that company then you have Legacy GE, which is now the aerospace business, $154 billion is the market cap there, and Larry Culp going to continue to lead that business. And now you've got voronova about the same size as health care more or less, which is sort of playing energy transition, wind turbines, things like that.

So that's how investors can think about this. As you said, we had some coverage initiation. Also RBC initiated voronova at an outperform rating with $160 price target here and that the company will reach 10% EBITDA margins by a year-end, 2026, which is a year ahead of where voronova is putting it. So there is some optimism that sort of baked in here.

And as we know, we've had a number of split-ups. 3M, for example, just had a spinoff as well. And the idea is that they'll do better stock wise on their own than they did all lumped together. So we'll see. I mean, there's no telling what the counterfactual is, if they had stayed together. But we'll see how they perform now that they're split apart.