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Reasons to Retain GE HealthCare Stock in Your Portfolio Now
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GE HealthCare Technologies, Inc. (GEHC - Free Report) is well-poised for growth in the coming quarters, courtesy of its continued focus on innovations. The optimism, led by strong second-quarter fiscal 2024 performance and acquisitions, is expected to contribute further. However, geopolitical tensions and stiff competition are concerning.
This Zacks Rank #3 (Hold) company’s shares have gained17.8% in the year-to-date period against 8.8% decline of the industry. The S&P 500 Composite has risen 20% during the said time frame.
The renowned provider of medical technology, pharmaceutical diagnostics and digital solutions has a market capitalization of $42.86 billion. The company projects 6.3% growth for the next five years and expects to maintain its strong performance in the future. It delivered a trailing four-quarter average earnings surprise of 5.89%.
Image Source: Zacks Investment Research
Factors Favoring GEHC’s Growth
Innovations Supporting Growth: GE Healthcare’s commitment to drive innovation has allowed it to achieve continuous, significant improvements. In September, GEHC announced that it received FDA approval for Flyrcado (flurpiridaz F 18), a breakthrough positron emission tomography myocardial perfusion imaging (PET MPI) agent for detecting coronary artery disease.
In the same month, the company launched a portable ultrasound system, Venue Spirit, to meet the growing demand for point-of-care ultrasound across various healthcare settings. In September, it also gained FDA approval for the use of its MIM Software for performing Centiloid scaling for positron emission tomography (PET)-based amyloid imaging analysis.
The company's Vscan Air SL wireless handheld ultrasound system with Caption AI received a CE mark in August. The company also received the CE mark for the use of ECG-less cardiac computed tomography (CT) scanning on its Revolution Apex platform.
In July, the company announced the availability of MIM Symphony high dose-rate (HDR) Prostate to support HDR brachytherapy and provide direct tumor visualization using magnetic resonance imaging (MRI) images during live ultrasound procedures. In May, the company launched a radiation therapy CT solution, Revolution RT, which will likely create a more streamlined standard of care for cancer patients.
Acquisitions & Partnerships: GE Healthcare has several partnership agreements that help it get long-term customers for its products and services. GEHC is also focused on acquiring companies that will help it grow.
In August, the company collaborated with the University of California San Diego School of Medicine to investigate advanced MRI protocols and techniques for female-specific diseases and conditions of the pelvis and develop comprehensive educational materials for clinicians.
The company signed an agreement in August to acquire Intelligent Ultrasound Group PLC’s (Intelligent Ultrasound) clinical artificial intelligence oftware business to make ultrasound more intelligent and effective. GEHC inked an agreement with Salud Digna in June to deploy digital solutions to improve the efficiency of care protocols for clinicians on CT, Magnetic resonance (MR) and ultrasound systems across Mexico.
In May, the company and Medis Medical Imaging announced their collaboration, which is intended for the process of advancing precision care for coronary artery disease diagnosis and therapy.
Strong Q2 Results:GE HealthCare exited second-quarter fiscal 2024 with decent results, wherein earnings and revenues improved year over year. Total company orders increased 3% organically year over year. The company witnessed continued strength in its Pharmaceutical Diagnostics business, with revenues increasing 12% from the year-ago quarter.
GEHC’s net income margin was 8.9%, up 20 basis points from the prior-year period due to benefits from productivity and pricing.
Factors That May Offset the Gains for GEHC
Stiff Competition: The presence of a large number of players has made the medical devices market highly competitive. The company faces competition not only from similar global participants but also from regional participants, which can vary by segment and product line.
In the industries it serves, the primary global competitors include Siemens Healthineers, Philips Healthcare, Canon and United Imaging. In the Pharmaceutical Diagnostics business segment, it primarily competes with Bayer, Bracco, Guerbet, Lantheus and Curium.
Geopolitical Tensions: GE Healthcare’s business faces risks from the ongoing war between Russia and Ukraine, as this has led to sanctions impacting business. The U.S. government and the European Union have implemented expanded measures since May 2023 for specified medical equipment and spare parts to customers in Russia.
The implementation of these measures affected GEHC’s ability to supply customers in Russia in 2023 and continued in the first quarter. In the first half of 2024, the company generated revenues of $161 million from Russia and Ukraine combined.
Estimate Trend
GEHC is witnessing a stable estimate revision trend for fiscal 2025. In the past 60 days, the Zacks Consensus Estimate for earnings has been unchanged at $4.26 per share.
The Zacks Consensus Estimate for third-quarter fiscal 2024 revenues is pegged at $4.86 billion, indicating a 0.9% improvement from the year-ago quarter’s reported number.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 56.1% compared with the industry's 48.1% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 13.9% so far this year compared with the industry’s 17.9% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 27.4% so far this year compared with the industry’s 17% growth.
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Reasons to Retain GE HealthCare Stock in Your Portfolio Now
GE HealthCare Technologies, Inc. (GEHC - Free Report) is well-poised for growth in the coming quarters, courtesy of its continued focus on innovations. The optimism, led by strong second-quarter fiscal 2024 performance and acquisitions, is expected to contribute further. However, geopolitical tensions and stiff competition are concerning.
This Zacks Rank #3 (Hold) company’s shares have gained17.8% in the year-to-date period against 8.8% decline of the industry. The S&P 500 Composite has risen 20% during the said time frame.
The renowned provider of medical technology, pharmaceutical diagnostics and digital solutions has a market capitalization of $42.86 billion. The company projects 6.3% growth for the next five years and expects to maintain its strong performance in the future. It delivered a trailing four-quarter average earnings surprise of 5.89%.
Image Source: Zacks Investment Research
Factors Favoring GEHC’s Growth
Innovations Supporting Growth: GE Healthcare’s commitment to drive innovation has allowed it to achieve continuous, significant improvements. In September, GEHC announced that it received FDA approval for Flyrcado (flurpiridaz F 18), a breakthrough positron emission tomography myocardial perfusion imaging (PET MPI) agent for detecting coronary artery disease.
In the same month, the company launched a portable ultrasound system, Venue Spirit, to meet the growing demand for point-of-care ultrasound across various healthcare settings. In September, it also gained FDA approval for the use of its MIM Software for performing Centiloid scaling for positron emission tomography (PET)-based amyloid imaging analysis.
The company's Vscan Air SL wireless handheld ultrasound system with Caption AI received a CE mark in August. The company also received the CE mark for the use of ECG-less cardiac computed tomography (CT) scanning on its Revolution Apex platform.
In July, the company announced the availability of MIM Symphony high dose-rate (HDR) Prostate to support HDR brachytherapy and provide direct tumor visualization using magnetic resonance imaging (MRI) images during live ultrasound procedures. In May, the company launched a radiation therapy CT solution, Revolution RT, which will likely create a more streamlined standard of care for cancer patients.
Acquisitions & Partnerships: GE Healthcare has several partnership agreements that help it get long-term customers for its products and services. GEHC is also focused on acquiring companies that will help it grow.
In August, the company collaborated with the University of California San Diego School of Medicine to investigate advanced MRI protocols and techniques for female-specific diseases and conditions of the pelvis and develop comprehensive educational materials for clinicians.
The company signed an agreement in August to acquire Intelligent Ultrasound Group PLC’s (Intelligent Ultrasound) clinical artificial intelligence oftware business to make ultrasound more intelligent and effective. GEHC inked an agreement with Salud Digna in June to deploy digital solutions to improve the efficiency of care protocols for clinicians on CT, Magnetic resonance (MR) and ultrasound systems across Mexico.
In May, the company and Medis Medical Imaging announced their collaboration, which is intended for the process of advancing precision care for coronary artery disease diagnosis and therapy.
Strong Q2 Results:GE HealthCare exited second-quarter fiscal 2024 with decent results, wherein earnings and revenues improved year over year. Total company orders increased 3% organically year over year. The company witnessed continued strength in its Pharmaceutical Diagnostics business, with revenues increasing 12% from the year-ago quarter.
GEHC’s net income margin was 8.9%, up 20 basis points from the prior-year period due to benefits from productivity and pricing.
Factors That May Offset the Gains for GEHC
Stiff Competition: The presence of a large number of players has made the medical devices market highly competitive. The company faces competition not only from similar global participants but also from regional participants, which can vary by segment and product line.
In the industries it serves, the primary global competitors include Siemens Healthineers, Philips Healthcare, Canon and United Imaging. In the Pharmaceutical Diagnostics business segment, it primarily competes with Bayer, Bracco, Guerbet, Lantheus and Curium.
Geopolitical Tensions: GE Healthcare’s business faces risks from the ongoing war between Russia and Ukraine, as this has led to sanctions impacting business. The U.S. government and the European Union have implemented expanded measures since May 2023 for specified medical equipment and spare parts to customers in Russia.
The implementation of these measures affected GEHC’s ability to supply customers in Russia in 2023 and continued in the first quarter. In the first half of 2024, the company generated revenues of $161 million from Russia and Ukraine combined.
Estimate Trend
GEHC is witnessing a stable estimate revision trend for fiscal 2025. In the past 60 days, the Zacks Consensus Estimate for earnings has been unchanged at $4.26 per share.
The Zacks Consensus Estimate for third-quarter fiscal 2024 revenues is pegged at $4.86 billion, indicating a 0.9% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . Universal Health Service sports a Zacks Rank #1 (Strong Buy), and Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 56.1% compared with the industry's 48.1% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 13.9% so far this year compared with the industry’s 17.9% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 27.4% so far this year compared with the industry’s 17% growth.