Should you invest in General Electric shares? The company is buying BK Medical

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Sep 23, 2021
  • General Electric shares on Thursday spiked 4.63% after agreeing on a deal to buy BK Medical.
  • The company is acquiring the leading advanced surgical visualisation company from Altaris Capital Partners.
  • GE will pay $1.45 billion in cash to complete the deal.

On Thursday, General Electric Co. (NYSE:GE) shares soared 4.63% after agreeing to buy BK Medical from Altaris Capital Partners. The company agreed to pay $1.45 billion in cash for the leading advanced surgical visualization company.

General Electric wants to use the acquisition in furthering its goal of expanding its healthcare division beyond diagnostics into surgical and therapeutic interventions. The company expects the purchase of BK Medical to boost revenue growth, operating margins, and profits.

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It expects to complete the deal in 2022.

Is General Electric stock a good buy in Q4 2021?

From a valuation perspective, General Electric shares trade at a steep P/E ratio of 171.97, making the stock less attractive to value investors. However, analysts expect its earnings per share to skyrocket by a whopping 2,537% this year before rising by a further 103% next year.

Therefore, although the stock may not appeal to value investors, growth investors could find it exciting ahead of the company’s prospective earnings growth. As a result, it could be a good time to buy GE shares.

Source – TradingView

Can the GE stock price rebound continue?

Technically, GE shares seem to have recently bounced back after finding the trendline support. As a result, the stock avoided slipping to oversold conditions of the 14-day RSI.

However, GE shares still have room left to run before retesting the trendline resistance, pinned to the 100-day moving average. 

Therefore, investors can target extended rebound profits at approximately $107.45 or higher at $113.95. On the other hand, $96.07 and $89.84 are crucial support levels.

Bottom line: it may not be too late to buy GE shares?

In summary, although General Electric shares spiked nearly 4.7% on Thursday, the stock is yet to reach the overbought conditions of the 14-day RSI. Therefore, GE has more room left to run upwards.

Moreover, with analysts expecting significant earnings growth this year and next year, the company’s BK Medical acquisition could be the perfect catalyst for a major rally.

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