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On Wednesday, Jefferies changed the investment firm's stance on GE HealthCare (NASDAQ:GEHC) Technologies Inc. (NASDAQ:GEHC), upgrading the stock from a "Hold" to a "Buy" rating. The firm also increased the price target for GE HealthCare to $103.00, up from the previous $95.00. The target falls within the broader analyst range of $74-$110, according to InvestingPro data, for this $38 billion market cap healthcare equipment leader.
In the wake of the upgrade, Jefferies highlighted the stock's attractive valuation following a recent pullback, noting that it now trades at just 17-18 times the projected earnings for 2025. This valuation falls below the average of its peers and is a significant drop from recent highs, where it was trading at approximately 20 times earnings.
InvestingPro analysis indicates the stock is currently trading at a P/E of 21.12, with their proprietary Fair Value model suggesting the stock is slightly undervalued. InvestingPro subscribers can access detailed valuation metrics and 5 additional exclusive ProTips for GEHC.
The analyst pointed out that the delay in economic stimulus in China has led to recalibrated expectations, which in turn has created an appealing entry point for investors. Jefferies sees potential for GE HealthCare to outperform even without a recovery in China, citing the company's growth in its Pharmaceutical (TADAWUL:2070) Diagnostics (PDx) division and overall core growth as key drivers.
Moreover, Jefferies suggested that any recovery in the Chinese market could provide additional upside for the company. Based on this optimistic outlook, Jefferies has added GE HealthCare to its list of franchise picks, indicating a strong conviction in the company's prospects.
GE HealthCare's share price movement in the coming days will reflect the market's reception to this updated analysis and the adjusted price target set by Jefferies.
In other recent news, GE HealthCare has submitted a 510(k) application to the U.S. Food and Drug Administration for its new CleaRecon DL technology. This deep learning innovation aims to improve the quality of cone-beam computed tomography (CBCT) images, a crucial tool in the interventional suite.
The company has also introduced OnWatch Predict, a predictive monitoring service for interventional image-guided systems designed to preemptively identify potential system failures.
In terms of recent financial performance, GE Healthcare reported Q3 revenues of $4.9 billion, reflecting a 1% organic revenue growth. The adjusted EPS rose by 15% year-over-year to $1.14, and the free cash flow for the quarter was reported at $651 million.
Despite challenges in the China market, the company revised its full-year adjusted EBIT margin and EPS guidance upwards, indicating confidence in its strategic initiatives and market position.
Analysts noted the company's robust performance in the U.S. market and its Pharmaceutical Diagnostics segment, which experienced a 7% organic growth. Meanwhile, GE Healthcare's CEO, Peter Arduini, and CFO, Jay Saccharo, expressed optimism about the company's future, highlighting the potential of new products and digital solutions. However, they acknowledged the slow recovery in the China market, expected to continue into the first half of 2025.
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