GE shares surge to 3-year high after it separates GE Healthcare

Shares of GE rose 7.76 percent June 26 after the company announced plans to spin off GE Healthcare into a separate entity, CNBC reports.

The jump in stock marked GE's strongest day since April 2015. Overall, GE stock is down 27 percent this year and has dropped 54 percent over the past year.

As a result of the restructuring, GE plans to focus on aviation, power and renewable energy. It will run GE Healthcare as usual until the spinoff is completed, at which point it plans to take 20 percent of the proceeds and distribute the rest to shareholders.

Moody's Investors Service reaffirmed its A2 rating and negative outlook for GE's debt, according to CNBC. GE's "ratings outlook remains negative as continued weakness in earnings and cash flows are expected through 2019 and into 2020," read a Moody's news release.

Similarly, Fitch Ratings does not anticipate the move will affect the company's rating. GE's decision to separate its healthcare business affects the company's diversification, earnings and cash flow, but these negative effects on GE's credit profile are mitigated by an expected reduction in debt and pension liabilities.

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