General Electric Company (NYSE:GE) shares were up more than 3 percent in trading today after the announcement that it would divested its stake in NBCUniversal. The bid for 49 percent of the company owned by GE came from Comcast Corporation (NASDAQ:CMCSA) and valued the stake at $17.6 billion.
Analysts are happy with the deal, which was not expected until next year, and have already begun to speculate about all the opportunities General Electric might avail itself of with all of that new cash. A Bank of America Corp (NYSE:BAC) report on the sale points to some tempting possibilities for the diversified industrial firm.
The analysts see three major opportunities for the company in the wake of its windfall. Those are increased share buybacks, speedier restructuring and opportunities for mergers and acquisitions. On buybacks, General Electric Company (NYSE:GE) is now expected to repurchase somewhere in the region of $10 billion of its stock in 2013. The Bank of America analysts previously estimated repurchases of $4 billion in 2013.
According to the analysis, the deal will leave General Electric with up to $9 billion to use in mergers and acquisitions. Exact targets are not examined in the report, but there are sectors that the analysts believe the firm is targeting.
Those sectors include aviation, oil and gas, and other heavy industry stocks. The analysts believe the firm is likely to make an acquisition in the $1-$4 billion price range. General Electric company has an interesting opportunity to grow ahead of expectations with this cash inflow. Investors are hoping the company can use the opportunity productively rather than wastefully.
Despite the new opportunities for accelerated growth, the Bank of America Corp (NYSE:BAC) analysts have not changed their EPS outlook for General Electric in the year to come. The firm is expected to reveal earnings of $1.69 per share in 2013. There is however, an upside to the firm’s 2014 earnings. The analysts expect earnings of $1.90 per share from GE in 2014.
The analysts expect the year ahead to be a big one for GE as it accelerates its efforts to get out of poorly performing business sectors, and enter into industries that return more value to its shareholders. The windfall from the NBC sale give the firm more freedom to make changes.
General Electric Company (NYSE:GE) shares have risen by more than 11 percent since the start of 2013, including the more than 3 percent rise in the value of the company in today’s trading. In the last twelve months the company’s shares have risen by more than 20 percent.