On Monday, UBS made a notable change in its stance on GE HealthCare (NASDAQ:GEHC) Technologies Inc. (NASDAQ:GEHC), shifting the rating from Sell to Neutral. Accompanying this upgrade, the firm also increased the stock's price target significantly, setting it at $88, up from the previous target of $66.
"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.
InvestingPro Insights
Following UBS's upgrade of GE HealthCare Technologies Inc. (NASDAQ:GEHC) from Sell to Neutral and the significant hike in the stock's price target to $88, let's delve into some key metrics and insights from InvestingPro. GE HealthCare's strong performance is underlined by a noteworthy 10.8% return over the last week, signaling significant investor confidence. This uptick is part of a broader positive trend, with the company experiencing a 17.05% return over the last three months.
InvestingPro data further reveals that GE HealthCare boasts a market capitalization of $37.04 billion USD and is trading near its 52-week high, with the price at 92.61% of that peak. This aligns with the UBS's revised price target and suggests that the market is valuing the company's growth prospects and recent performance. Additionally, the company's revenue growth for the last twelve months as of Q4 2023 stands at 6.6%, reinforcing the positive outlook on GE HealthCare's ability to expand its margins as indicated by the management's forecast.
Investors seeking a more comprehensive analysis can find additional InvestingPro Tips for GE HealthCare, which highlight the company's status as a prominent player in the Healthcare Equipment & Supplies industry and analysts' predictions of profitability this year. For those interested in a deeper dive, InvestingPro offers a suite of tools and insights, including 5 additional tips for GE HealthCare, which can be accessed at https://www.investing.com/pro/GEHC. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.