UBS Upgrades GE HealthCare Technologies to Neutral, Raises Price Target
On Monday, UBS made a notable change in its stance on GE HealthCare Technologies Inc. (NASDAQ:GEHC), shifting the rating from Sell to Neutral. The firm also increased the stock’s price target to $88, up from the previous target of $66. This upgrade comes as UBS analysts acknowledge the company’s credible strategies for margin improvement.
“At the full-year 2023 results, management provided credible margin guidance implying 50-80bp of expansion despite limited revenue growth, with improved mix and crucially cost savings driving this,” said the analysts.
While UBS’s outlook remains more conservative than the company’s mid-term margin guidance, particularly for the Imaging business, the analyst believes that the risks associated with their benchmarking work will not be an immediate concern. The updated price target reflects these considerations, as well as the stock’s valuation, which is not considered excessively high when compared to peers. GE HealthCare currently trades at a 20x price-to-earnings ratio for 2024, which is a 10% discount to its industry counterpart Siemens Healthineers.
The analyst’s comments underscore a shift in perception towards GE HealthCare’s financial prospects, noting the company’s credible strategies for margin improvement. Although UBS maintains a cautious view on the long-term margin goals set by the company, the near-term outlook appears more stable, justifying the neutral position.
Following UBS’s upgrade of GE HealthCare from Sell to Neutral and the significant hike in the stock’s price target to $88, GE HealthCare’s strong performance is highlighted by a 10.8% return over the last week. This is part of a broader positive trend, with the company experiencing a 17.05% return over the last three months.
InvestingPro data shows GE HealthCare has a market capitalization of $37.04 billion USD and is trading near its 52-week high, at 92.61% of that peak. This aligns with UBS’s revised price target and suggests that the market is valuing the company’s growth prospects and recent performance positively. Additionally, the company’s revenue growth for the last twelve months as of Q4 2023 stands at 6.6%, reinforcing the optimistic outlook on GE HealthCare’s ability to expand its margins as indicated by the management’s forecast.
Analyst comment
Positive news. As UBS upgrades GE HealthCare Technologies to Neutral and raises the price target to $88, the market is responding positively with a 10.8% return over the last week. The company’s credible strategies for margin improvement and positive revenue growth support the optimistic outlook for its future performance. The market values the company’s growth prospects and recent performance, suggesting continued positive momentum.
