Jefferies upgrades GE HealthCare to 'buy,' sets PT at $103

Investing.com -- Jefferies analysts recently upgraded their rating on GE HealthCare (NASDAQ:GEHC) Technologies Inc. to "buy" from "hold," reflecting a more optimistic outlook for the company. 

Shares of the medical technology company were up 1.3% in pre-open trade at 09:04 ET (14:04 GMT).

The upgrade comes with a revised price target of $103, up from the previous $95, citing factors such as market positioning, growth opportunities, and new product launches as drivers for the anticipated stock performance.

GE HealthCare operates in key areas like imaging, advanced visualization, patient care solutions, and pharmaceutical diagnostics. 

In particular, analysts noted the company's potential to capture market share in diagnostic imaging and prenatal diagnosis, which they described as expanding and under-modeled for future growth. 

Products such as Flyrcado, a cardiac PET agent, and others like Vizamyl and Cerianna, are positioned to support revenue increases, especially as new diagnostics become more integrated into healthcare systems.

Jefferies also pointed to strong execution in a healthy market environment, with the company's current trading multiple seen as undervalued compared to historical averages and peers. 

The analysts said that GE HealthCare's recurring revenues, which constituted 45% of total sales in 2023, are expected to rise to about 60% over the long term. 

This shift, coupled with mid-term opportunities in China and ongoing innovation in imaging and digital healthcare, adds to the optimism around the company's future.

Additionally, GE HealthCare’s investor day presentation in late 2024 outlined medium-term targets for 4-6% organic revenue growth and an increase in EBIT margins to 20% or higher by 2028. 

These conservative goals, combined with ongoing cost optimizations and strategic pricing initiatives, suggest further upside potential.

“We see GEHC as a structural winner in imaging alongside SHL (Julien Dormois, Buy) given we expect these players to lead on innovation and benefit from consolidation,” Jefferies said. 

They cited China’s delayed stimulus as an area of uncertainty but added that any recovery in this market would be an additional boost for the company.