This move is essential for General Electric to stay competitive, Bernstein senior analyst Steven Winoker said on CNBC's "Squawk Box" on Friday morning. The firm has a "market perform" rating and $33 price target on GE stock.
"This is a need for them defensively," Winoker claimed.
GE has to be pursuing these types of deals in order to compete against Schlumberger (SLB), FMC (FMC) and other competitors who are making similar deals, he said.
"[GE] doesn't have the full spectrum, and they need to if they're going to create this digital oil field. Any kind of partnership with Baker-Hughes, if you put them together, they're much stronger and they can be more defensive against the other guys," Winoker explained.
Investors should note that GE has been "explicit" that it's talking about partnership deals, not an outright purchase of Baker Hughes, he said. GE seems to be seeking a "large partnership that allows them to get better subsea deep water access in a digitized way."
This is the "best time" in the cycle to be entering this partnership discussion, he added. "In other words, wait until things are at their most highest pain points, and you're in a stronger position in GE's case. And the reason I say this is this is now a $13 billion revenue business."
Baker Hughes stock was surging by 5.98% to $57.81 in early morning trading on Friday. GE stock was also trading higher.
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Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings team rates General Electric as a Buy with a ratings score of B-. This is driven by some important positives, which the team believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks the team covers.
You can view the full analysis from the report here: GE