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Sell 95 shares of GE Healthcare for approximately $74. After Wednesday’s trading, the Jim Cramer Charitable Trust will own 1,150 shares of GEHC, reducing its weight from 2.97% to 2.75%. GE Healthcare is making small trims with a slight increase in inventory with rough tape, but our belief remains that this medical device maker is a long-term strategy. The rollout of Alzheimer’s disease drugs and the integration of artificial intelligence into their products will lead to enhanced pricing and higher profit margins. But China is making us nervous right now. This story is popular outside of China. In a presentation at the JPMorgan Healthcare Conference earlier this month, management expressed optimism about the hospital capital spending environment in 2024 and 2023. If hospitals have the capacity to invest in medical equipment, some of that money will go to GE Healthcare. However, GE Healthcare’s competitor Philips reported earnings earlier this week and said its fourth-quarter orders were down 3%, largely due to — you guessed it — China. This is said to be due to the decline in sales. To be fair, GE Healthcare’s better performance in China, where orders increased year-over-year, was the reason the stock soared after the company released its third-quarter results in October. GEHC 1Y Mountain GE Healthcare 1 Year Fast forward to the JPMorgan conference, and GEHC said it has not yet seen any material deterioration in its China operations. The company is scheduled to report its quarter next week. Additionally, the company has outpaced its competitors in orders in recent quarters. Philips’ orders have declined for six straight quarters, but GE Healthcare hasn’t seen any similar weakness yet. So why cut GEHC now? Heading into Tuesday’s paper, we want to leave some room in the position. In case stocks fall under cautious guidance due to the China influence, or if management wants to start the year with a conservative outlook that it can get through the year, we I would like to be prepared for this. We change our rating for GEHC to 2 to reflect the small sale. We have fought this name and added to our position several times after the stock dropped below $70. Wednesday’s sale will result in a modest loss of about 7% on the GEHC stock purchased last May. (Jim Cramer’s charitable trust is long GEHC. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you receive trade alerts before Jim makes a trade. I will receive it. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in a charitable trust’s portfolio. If Jim talks about a stock on his CNBC TV, he will wait 72 hours before executing the trade after issuing a trade alert. The above investment club information is subject to our Terms of Use and Privacy Policy, as well as our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
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