March 20 (Bloomberg) -- General Electric Co. gained 5.3 percent in New York trading after the stock was raised to ``buy'' from ``neutral'' at Merrill Lynch & Co. on expectations its range of businesses will help the company weather a U.S. recession.

GE's finance units are unlikely to record ``substantial'' asset writedowns similar to those posted at other banks following the collapse of the U.S. subprime mortgage market, New York-based analyst John G. Inch wrote in a report today.

The Fairfield, Connecticut-based company's above-average dividend yield, along with demand for electricity generation and health care equipment will help drive performance, Merrill said. Shares yield 3.5 percent, exceeding the 2.3 percent payout on the S&P 500. As GE sells more equipment such as turbines, higher-margin service and financing contracts will bring more profitable revenue streams, Inch wrote.

``As the U.S. potentially moves deeper into recession and considering other global economies may potentially follow toward softer activity, we think GE's defensive conglomerate positioning can allow the stock to further outperform,'' Inch wrote. GE will boost profit faster than the rest of the Standard & Poor's 500 Index this year, he wrote.

GE, which gets more than half its revenue from outside the U.S., rose $1.90 to $37.49 at 4:15 p.m. in New York Stock Exchange composite trading. The stock is up 11 percent this week, more than the 3.2 percent climb in the Standard & Poor's 500 index and the biggest four-day gain in five years.

Chief Executive Officer Jeffrey Immelt in December forecast profit growth of at least 10 percent in 2008, and last week repeated that expectation. That's above the S&P forecast for 7 percent to 8 percent, Inch wrote.

GE P/E

Inch set a share-price estimate of $43 for GE, based on a forecast that the company will earn $2.75 a share in 2009. That would give GE a price-to-earnings multiple of about 15.5, near the 30-year average for the S&P 500, the analyst said.

General Electric is the world's biggest provider of power- plant turbines, jet engines, medical imaging machines, aircraft leasing and locomotives. Other units include water treatment, security, NBC Universal media, consumer and commercial lending.

Finance units include aircraft leasing, real estate, middle-market lending, truck and modular space leasing, retail financing, private-label credit cards and consumer loans.

GE's AAA credit rating, the highest available, should allow the division to capture lending business from rivals ``and acquire financial assets at discount prices,'' Inch wrote.

To contact the reporters on this story: Rachel Layne in Boston at rlayne@bloomberg.netElizabeth Stanton in New York at estanton@bloomberg.net;

Last Updated: March 20, 2008 16:54 EDT