GE Healthcare exhibits indicators of life, however ongoing uncertainty holds us again
Every weekday, CNBC Investing Club with Jim Cramer publishes the Homestretch—an actionable afternoon update, just in time for the final hour of trading on Wall Street. Other weakness: There were a few attempts at a rally on Wednesday, but shares are still mostly down in the second session of September after a rocky start to the month on Tuesday. Nvidia is doing relatively better after its 9.5% plunge on Tuesday, but was trading slightly lower in afternoon trading after previously trading higher. The stock was down in three of the last four sessions through Wednesday. In addition, we initiated a new position in home improvement retailer Home Depot, increasing our exposure to beneficiaries of the Federal Reserve's rate cut. China in focus: GE Healthcare kicked off two consecutive days of Wall Street events on Wednesday with a fireside chat with CFO Jay Saccaro at the Wells Fargo Healthcare Conference. We focused most on what Saccaro had to say about China after the company cut its organic growth forecast in July, citing solely weakness in the region and the lack of new government stimulus spending. As a reminder, GE Healthcare actually rallied on the disappointing news because some investors believed the new forecast made the region completely “de-riskable” for the rest of the year. About a month later, it looks like stimulus measures in China are still gaining little traction. “It's kind of progressing as we expected. There's increased interest in putting orders in what we call the pre-tender bucket. So we're seeing progress that we would expect,” Saccaro explained. “But all of that has to pay off from pre-tender to tender and approval to order and sale. So it's a pretty lengthy process. The most important thing is that this is a longer process than the last stimulus package.” Saccaro also spent some time discussing what could be a big opportunity for its radiopharmaceuticals business due to changes in imaging reimbursements proposed by the Centers for Medicare and Medicaid Services. The company plans to talk a lot more about that at its investor day in December. Overall, Saccaro's remarks didn't change our opinion of the stock. The U.S. business is thriving thanks to strong treatment volumes and high hospital profitability, but the uncertain development in China is keeping us off course. Management will speak at the Morgan Stanley Global Healthcare Conference on Thursday shortly after 1 p.m. ET. GE Healthcare shares gained over 2% on Wednesday and are on track for their highest close since April. Up next: After the market closes on Wednesday, we'll hear earnings from AeroVironment, Hewlett Packard Enterprise, Casey's General Stores and C3.ai. On Thursday's economic data calendar, we take a look at private wage growth in ADP's monthly jobs report and the ISM Services Index. (For a full list of stocks in Jim Cramer's Charitable Trust, click here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. After sending a trade alert, Jim will wait 45 minutes before buying or selling a stock from his charitable trust's portfolio. If Jim has discussed a stock on TV on CNBC, he will wait 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR OBLIGATION EXISTS OR IS CREATED BY RECEIVING INFORMATION RELATED TO THE INVESTING CLUB, AND NO PARTICULAR RESULT OR PROFIT IS GUARANTEED.
Every weekday, CNBC Investing Club with Jim Cramer publishes the Homestretch – an actionable afternoon update, just in time for the final hour of trading on Wall Street.
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