Morgan Stanley says the firm wasn’t entirely surprised at Bloomberg reporting that GE Healthcare (GEHC) was considering functionally exiting its China unit, especially considering the moves in other sectors. Long term, Morgan Stanley thinks it could be the right call for many of its companies. China has always been a tempting market given the population, but the many years of rolling VBP pricing can only be handled so many times though SG&A reduction, the firm argues. Meanwhile, policies favoring domestic players and continuous anti-corruption measures have created a very challenging environment for some time, while apparently helpful reform for OUS players never quite delivered, Morgan Stanley adds. The firm has an Equal Weight rating on the shares with a price target of $74.
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