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Will a Change of Guard Boost GE Stock?

PART:
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Will a Change of Guard Boost GE Stock? PART 1 OF 2

GE Healthcare’s John Flannery to Lead General Electric

Change of leadership

On June 12, 2017, General Electric (GE), a diversified industrial behemoth, announced the stepping down of its chairman and CEO (chief executive officer), Jeff Immelt, effective August 1, 2017. GE Healthcare’s CEO John Flannery will take over the reins in August.

GE Healthcare’s John Flannery to Lead General Electric

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GE’s stock price

With this news, market euphoria sent GE stock up 3.6% to close at $28.9 on June 12, though the company’s stock slipped slightly and closed at $28.7 on June 14. The other industrial big guns in GE’s peer group reacted in the following ways to the development on June 12:

  • Illinois Tool Works (ITW) rose 1.17%.
  • Honeywell International (HON) rose 0.85%.
  • Parker-Hannifin (PH) ) rose 0.84%.
  • United Technologies (UTX) rose 0.15%.
  • 3M Company (MMM) rose 0.82%.
  • Koninklijke Philips (PHG) rose 0.78%.

The SPDR S&P 500 ETF Trust (SPY), which covers the broader market, rose 0.5% on June 14. Notably, General Electric makes up 1.2% of the total portfolio holdings of SPY.

Management changes   

On June 12, 2017, General Electric also promoted Jeff Bornstein, its current CFO (chief financial officer), to vice chair of the company. On the same day, GE announced the appointment of Kieran Murphy as CEO of GE Healthcare, succeeding John Flannery, and named Russell Stokes as a president and CEO of GE Power, replacing Steve Bolze.

Investors should note that these changes in management are the outcome of planning that started way back in 2011.

In the corresponding part of this series (below), we’ll review what led to these changes in GE’s top brass.

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