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Valued at a market cap of $40 billion, GE HealthCare Technologies Inc. (GEHC) develops, manufactures, and markets products, services, and complementary digital solutions used in the diagnosis, treatment, and monitoring of patients. The Chicago, Illinois-based company operates through four segments: Imaging, Ultrasound, Patient Care Solutions, and Pharmaceutical Diagnostics.
Shares of this healthcare company have lagged behind the broader market over the past 52 weeks. GEHC has gained 7.6% over this time frame, while the broader S&P 500 Index ($SPX) has gained 20.7%. Nonetheless, on a YTD basis, the stock is up 11.9%, compared to SPX’s 3.1% rise
Zooming in further, GE HealthCare has outpaced the Health Care Select Sector SPDR Fund’s (XLV) 1.6% return over the past 52 weeks and a 6.4% gain on a YTD basis.
On Oct. 30, GEHC’s shares closed up nearly 2.3% after its Q3 earnings release. The company’s adjusted EPS of $1.14 improved 15.2% year-over-year and topped the Wall Street estimates by a notable margin of 7.5%, while its revenue grew nearly 1% from the year-ago quarter to $4.9 billion and met the consensus estimates. Strength in the U.S. market across all segments aided the results.
Moreover, higher procedure volumes fueled robust growth in the Pharmaceutical Diagnostics segment. Additionally, a 190 bps expansion in net income margin, driven by productivity improvements and pricing strategies, contributed to the robust bottom-line growth. However, continued weakness in the Chinese market partially offset these gains.
The company raised its fiscal 2024 adjusted EPS guidance between $4.25-$4.35, indicating growth of 8-11%. However, due to softness in China, revenues are now anticipated to be at the lower end of the guided range of 1-2%.
For the fiscal year, which ended in December, analysts expect GEHC’s EPS to grow 9.4% year over year to $4.30. The company’s earnings surprise history is promising. It surpassed or met the Wall Street estimates in each of the last four quarters.
Among the 18 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 12 “Strong Buy,” five “Hold,” and one “Strong Sell” rating.
This configuration is slightly more bullish than three months ago, with 11 analysts suggesting a “Strong Buy” rating.
On Jan. 8, Jefferies upgraded GEHC’s rating to “Buy” and raised its price target to $103, which indicates a 17.7% potential upside from the current levels.
The mean price target of $97.33 represents an 11.2% upside from GE HealthCare’s current price levels, while the Street-high price target of $110 suggests an upside potential of 25.7%.
