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Investing.com -- Goldman Sachs raised rating on GE HealthCare Technologies Inc (NASDAQ:GEHC) to "Buy" from "Neutral” as China’s healthcare market is showing signs of stabilization, with demand for medical technology and diagnostic tools expected to rebound in 2025.
Amid an ongoing policy and trade uncertainties, Goldman Sachs said pent-up demand and government stimulus programs are helping to ease market slowdowns.
The healthcare sector in China has faced several headwinds in recent years, including government price controls on medical equipment, anti-corruption measures, and delays in stimulus programs meant to boost investment.
These challenges led multinational healthcare firms such as GE Healthcare, Philips, and Siemens (ETR:SIEGn) Healthineers to cut sales forecasts in China for 2024.
However, Goldman Sachs noted that capital investment in medical technology is beginning to recover, leading to a more positive outlook for 2025. While global companies have been reducing their focus on China, local firms are expanding into international markets.
Goldman Sachs expects companies with strong innovation and differentiated technology to benefit from the recovery. Besides upgrading GE Healthcare, the bank remains positive on Boston Scientific (NYSE:BSX) and Intuitive Surgical (NASDAQ:ISRG), both of which offer advanced medical solutions.
Meanwhile, European medical technology firms such as Siemens Healthineers and Philips are also expected to see easing pressures in China over the next 12 to 18 months. Goldman Sachs has raised its earnings forecasts for Siemens Healthineers and upgraded Carl Zeiss to "Buy," citing improving demand in China’s ophthalmology sector.
However, some companies remain under pressure. The report warned that price controls on diagnostic reagents could continue to hurt profitability. Danaher (NYSE:DHR) has already increased its estimated losses from these regulations to $150 million in 2025, with further risks in 2026 as Chinese competitors gain market share.
In the life sciences sector, Goldman Sachs sees opportunities for companies such as Agilent (NYSE:A) and Thermo Fisher (NYSE:TMO) to benefit from government stimulus for research and diagnostics. Companies like Waters (NYSE:WAT) and Bruker (NASDAQ:BRKR) could also gain in the longer term as funding expands beyond basic applications like food and water testing.
Despite rising competition from Chinese firms, Goldman Sachs believes foreign players still hold an advantage in high-end medical technology, such as electron microscopes and mass spectrometry equipment.