ODRO
We are selling 350 shares of GE Healthcare at roughly $82.79. Following the trade, Jim Cramer’s Charitable Trust will own 1,000 shares of GEHC, decreasing its weighting in the portfolio to 2.6% from roughly 3.5%. Shares of the medical equipment maker GE Healthcare are off to a solid start this week, gaining roughly 3% while the S & P 500 index drifted lower. Some of that outperformance on Monday was a reaction to rival Philips ‘ better-than-expected quarter, which was largely driven by North America. However, China remained a weak spot, as the government’s anti-corruption campaign across the health-care sector led to a decline in orders. The pain should be short term, Philips said: The company expects orders to gradually grow in the coming quarters, supported by the Chinese government’s recently announced stimulus program for the renewal of aged medical equipment. When GE Healthcare reports Wednesday before the opening bell, we expect to hear much of the same. The results should be better after the company shockingly missed on revenues and adjusted earnings per share in the first quarter. Management previously said improving hospital fundamentals creates a strong backdrop for demand, so the orders at home should be robust. But we can’t help but be concerned about China. Not only have orders been hurt by the anti-graft measures, but they’ve also been impacted by customers delaying orders as they await more information around stimulus. While it is certainly possible that GE Healthcare trades higher on strong results in North America, like Philips, the stock frequently trades on sentiment in China. As a way to hedge against the risk of those stimulus-driven orders getting pushed out another quarter, we are trimming the position so that we have more room to buy on weakness. We are also downgrading our rating to a 2. A pullback related to another delay in orders could be a solid buying opportunity because it’s a short-term issue that should yield better results in 2025. Lastly, we note that the stock has made a solid move higher since falling 14% to $76 on earnings in late April. We bought 125 shares at around $81 in early May and bought 75 shares at roughly $78 in late May. Given the intra-quarter rally off the low, we want to sell these shares back, plus a few more, to free up some room in our position. We’ll realize a gain of roughly 4% on stock purchased in May 2023. (Jim Cramer’s Charitable Trust is long GEHC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
