GE Healthcare shows signs of life, but lingering uncertainty keeps us on the sidelines

Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. More Weakness: There were a few rebound attempts on Wednesday, but stocks remained mostly lower on September’s second trading day after a shaky start on Tuesday. Nvidia held up relatively well after plunging 9.5% on Tuesday, but was slightly lower in afternoon trading after rising earlier. The stock had been lower in three of the last four trading days heading into Wednesday. Elsewhere, we created a new position in home improvement retailer Home Depot and increased our exposure to beneficiaries of the Fed’s rate cuts. Focus on China: GE Healthcare kicked off several days of Wall Street activity on Wednesday with a fireside chat with Chief Financial Officer Jay Saccaro at the Wells Fargo Healthcare Conference. What we’re most interested in is Saccaro’s view on China after he downgraded his organic growth forecast in July, a cut entirely due to weakness in the region and a lack of new government stimulus spending. As a reminder, GE Healthcare actually bounced back on the disappointing news, as some investors believed the new outlook completely “eliminates” risk to the region for the rest of the year. About a month later, the appeal of China’s stimulus measures still appears limited. “The progress is as we expected. There is increasing interest in placing orders in what we call the pre-tender phase. So the progress we are seeing is somewhat as we expected,” Saccaro explained. “But all of this has to come at a cost, from pre-tender to bid to approval to order to sale. So it’s a pretty long process. And most importantly, it’s a longer process than the last stimulus package.” Carlo also spent some time discussing the huge opportunities that could arise for its radiopharmaceutical business due to proposed changes to developer reimbursement by the Centers for Medicare and Medicaid Services. The company plans to discuss the issue more at its investor day in December. Overall, Saccaro’s comments don’t change our view on the stock. The U.S. business is booming due to strong procedure volume and hospital profitability, but uncertain developments in China have left us at a standstill. Management is scheduled to speak at the Morgan Stanley Global Healthcare Conference shortly after 1 p.m. ET on Thursday. GE Healthcare shares rose more than 2% on Wednesday and were expected to hit their highest closing price since April. Next up: After the close 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 will see private employment growth in the ADP monthly employment report and the ISM services index. (See here for a complete list of stocks in the Jim Cramer Charitable Trust.) As a subscriber to Jim Cramer’s CNBC Investing Club, you will receive trade alerts before Jim makes his trades. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation shall exist or arise upon your receipt of any information relating to the Investment Club. No specific results or profits are guaranteed.

Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street.

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