The company will sell 350 shares of GE Healthcare for about $82.79. After the transaction, the Jim Cramer Charitable Trust will hold 1,000 shares of GEHC, lowering GEHC’s weighting in the portfolio to 2.6% from about 3.5%. Medical equipment maker GE Healthcare shares got off to a solid start this week, rising about 3% amid a decline in the S&P 500 index. Part of Monday’s outperformance was a response to rival Philips’ better-than-expected quarterly results, driven mostly by North America. But China remains a weakness, with a government anti-corruption campaign across the health sector leading to a decline in orders. Philips said the pain will be short-lived. The company expects orders to gradually increase over the next few quarters, buoyed by the Chinese government’s recently announced stimulus package for the replacement of aging medical equipment. We expect to hear much the same when GE Healthcare reports before the market opens on Wednesday. Results should improve after the company missed expectations on sales and adjusted earnings per share in the first quarter. Management previously said that improving hospital fundamentals are creating a strong backdrop for demand, and domestic orders will be solid. However, we can’t help but be concerned about China. Orders have been hit by anti-corruption measures, but also by customers delaying orders as they await more information on the stimulus package. While GE Healthcare could certainly see its stock rise on strong North American results, like Philips, the company’s stock frequently trades on sentiment in China. We are trimming our position to give ourselves more room to buy during weakness as a way to hedge against the risk that stimulus orders are delayed for another quarter. We are also lowering our rating to 2. A pullback related to further delays in orders could be a solid buying opportunity, as it is a near-term issue that should lead to better results in 2025. Finally, we note that the stock has been climbing steadily since its 14% drop to $76 on late April earnings. We bought 125 shares at about $81 in early May and 75 shares at about $78 in late May. Given the rally from the intra-quarter lows, I would like to sell these stocks plus a few more to give my position some breathing room. I would realize a gain of about 4% on the stocks I bought in May 2023. (The Jim Cramer Charitable Trust is long GEHC. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes any trades. Jim will buy or sell shares in the Charitable Trust’s portfolio 45 minutes after he sends a trade alert. If Jim talks about a stock on CNBC television, he will execute the trade 72 hours after issuing a trade alert. The Investment Club information above is subject to our Terms of Use and Privacy Policy, as well as Disclaimer. The receipt of any information provided in connection with the Investment Club does not create any fiduciary duty or liability. No specific results or benefits are guaranteed.
