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Valued at $37.9 billion by market cap, GE Healthcare Technologies Inc. (GEHC) is a global medical device provider involved in designing, developing, manufacturing, and distributing clinical systems and diagnostic devices. GE Healthcare operates in four segments: Imaging, Ultrasound, Patient Care Solutions, and Pharmaceutical Diagnostics.
Formerly known as GE Healthcare Holding LLC, the company changed its name to GE Healthcare Technology in December 2022, and went public in January 2023 as part of the larger corporate break-up of General Electric.
About GEHC Stock
Chicago-based GEHC has been volatile this year. The stock is up 7.9% in 2024, lagging the S&P 500 Index ($SPX) return of 26.6%. The stock has pulled back about 12% from its 52-week high of $94.55, set in late September.
GEHC is also a dividend stock, and just hiked its cash dividend to $0.035 per share for Q4, representing a 17% sequential increase from the previous quarter.
That said, the annualized dividend of $0.14 translates to a modest yield of 0.17%, and the conservative payout ratio (less than 5%) indicates that GEHC is currently focused on growth. While GEHC isn't yet a top pick for passive income, the company's early commitment to dividend hikes is promising.
GEHC Beats Q3 Earnings Estimates
GE Healthcare stock gained about 2% on the day after posting its third-quarter earnings results on Oct. 30. GEHC reported a Q3 profit of $470 million, or $1.14 per share on an adjusted basis, easily outpacing analysts' $1.06 per share estimate. Bottom-line results were up 15% YoY from last year’s profit of $0.99 per share.
Revenue increased 0.9% YoY to $4.86 billion, matching experts' expectations. Pharmaceutical Diagnostics revenue was a strong point, up 6% YoY to $625 million, but was offset by regional weakness in China. Total company orders were up 1% organically from the year-ago period.
GEHC’s net margin during the quarter was up to 9.7%, up 190 basis points year over year, driven by benefits from productivity and pricing.
During the quarter, cash flow from operating activities reached $742 million, up from last year's $650 million, while free cash flow improved to $651 million from $570 million. Full-year free cash flow is expected at $1.8 billion.
For fiscal 2024, GEHC also updated its adjusted EPS guidance to a range between $4.25 and $4.35, compared to $4.20-$4.35 previously. Analysts were looking for $4.25, on average. Management expects organic revenue at the lower end of its previously provided 1-2% range, citing softness in China.
Analysts See More Upside for GE Healthcare Stock
Analysts are relatively positive on GEHC stock, with a “Moderate Buy” consensus rating among the 18 experts in coverage.
The mean price target is $97.56, which suggests the stock can rise about 17.2% from current levels.
Valued at 19.37 times forward adjusted earnings and 1.93 times forward sales, GEHC looks like a reasonably valued healthcare stock to buy now for long-term upside.
