GE HealthCare stock supported by capital backlog and margin expansion

On Monday, JPMorgan initiated coverage on GE HealthCare (NASDAQ:) Technologies Inc. (NASDAQ: GEHC) stock with a Neutral rating and a price target of $90.00. The firm highlighted the company’s position in the medical imaging market, which is characterized by high barriers to entry and significant switching costs for customers.

GE HealthCare, known for its capital-intensive operations, benefits from favorable network economics within the oligopoly structure of the industry. The company’s substantial capital backlog, estimated at approximately $19 billion, supports expectations for sustained organic growth in the low- to mid-single-digit range. This growth is anticipated to be accompanied by an expansion of healthy operating margins.

The analyst noted the potential for increased revenue and margins from GE HealthCare’s unique pharmaceutical diagnostic agents, Flurpiridaz and Vizamyl. Additionally, the company’s investment in digital and AI-driven software offerings is expected to contribute to its financial performance. These factors contribute to a positive outlook for the company’s future.

Looking ahead, the analyst anticipates that GE HealthCare will experience above-trend growth post-2025. This projection is based on the potential recovery of the Chinese market, the ramp-up of new products, and the expansion of the installed base.

Despite these prospects, the analyst suggests that current consensus expectations have already accounted for a significant margin expansion, estimating an increase of approximately 100 basis points year-over-year in EBIT margin for 2025, following an estimated 90 basis points increase in 2024.

InvestingPro Insights

GE HealthCare Technologies Inc. (NASDAQ: GEHC) is poised to maintain a strong presence in the healthcare equipment landscape, and recent data from InvestingPro underlines several aspects of its financial health and market performance. With a market capitalization of $38.86 billion and a P/E ratio of 24.53 for the last twelve months as of Q2 2024, the company showcases a stable valuation in the industry. Furthermore, GE HealthCare has demonstrated a solid revenue growth of 2.52% over the same period, reflecting its capacity for sustained organic growth that aligns with JPMorgan’s analysis.

An InvestingPro Tip highlights GE HealthCare’s low price volatility, which may appeal to investors seeking stability in their portfolio. The company’s status as a prominent player in the Healthcare Equipment & Supplies industry is also emphasized, suggesting a strong competitive position. Additionally, analysts predict the company will be profitable this year, supported by its profitability over the last twelve months. These insights echo the positive sentiment expressed by JPMorgan, reinforcing the company’s potential for continued financial performance.

For investors seeking more in-depth analysis, InvestingPro offers numerous additional tips to guide investment decisions. To explore these insights further, visit https://www.investing.com/pro/GEHC.

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