GE CEO Culp's quick comments about health spinoff could mean an 'outright sale'

  • Analyst Scott Davis says Danaher, which Larry Culp once ran, would "love" to own the life sciences business of GE Healthcare.
  • "As for the diagnostic equipment, that is less clear," Davis says, stressing it would be "a very large deal."

General Electric CEO Larry Culp's latest comments to CNBC about GE Healthcare could indicate an "outright sale" is among the options under consideration, according to a leading industry analyst.

Culp called GE Healthcare a "tremendous" franchise, which has "flexibility" in terms of the planned spinoff. "We could preserve our tax-free spin status while selling up to 49.9 percent," Culp told CNBC's David Faber on Monday.

"I think [Culp] is weighing all options including the outright sale of the business or parts of it," Scott Davis, chairman and CEO of Melius Research, told CNBC. Davis, who personally owns GE shares, maintains a buy rating on the stock with a $21 per share price target.

Danaher, where Culp was CEO from 2000 to 2014, would "love" to own the life sciences business of GE Healthcare, Davis added. "As for the diagnostic equipment, that is less clear," he said, stressing it would be "a very large deal."

When asked for further comment, GE directed CNBC to Culp's comments earlier. On the Oct. 30 postearnings call, Culp indicated flexibility around GE Healthcare.

GE Healthcare is a cash cow, throwing off $3.4 billion in profit last year. The unit accounted for 15.8 percent of General Electric's total 2017 sales and contributed 43.2 percent to GE's operating profit last year.

Culp, 55, replaced John Flannery as chairman and CEO on Oct. 1 after the board reportedly became frustrated with the slow pace of change at the struggling industrial conglomerate.

Shortly after the leadership change, both GE and GE Healthcare had told CNBC they were "committed to establishing Healthcare as a separate independent entity."

A spokeswoman for GE Healthcare said at the time that the unit "plans to continue working toward separation," and Flannery's departure "does not change what's happening."

GE Healthcare, under CEO Kieran Murphy, plans to become independent by the end of 2019. General Electric has said the spinoff makes sense because it allows the company to double down on its core industrial and energy businesses.

Shares of GE were under more pressure on Monday, trading around $8 per share around midday. GE is on pace for its worst year since 2008 when it lost 56.3 percent.

WATCH: CNBC's full interview with General Electric's Larry Culp