🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

GE HealthCare stock gets buy rating, $100 stock target from HSBC

EditorNatashya Angelica
Published 02/15/2024, 04:52 AM
© Reuters.
GEHC
-

On Thursday, HSBC initiated coverage on GE HealthCare (NASDAQ:GEHC) Technologies Inc. (NASDAQ:GEHC) with a Buy rating and set a price target of $100.00, indicating a potential upside of approximately 20%. The coverage begins as analysts see a favorable risk-reward balance for the company, which is currently trading at significant discounts compared to its peers.

GE HealthCare is trading at a forward price-to-earnings (PE) ratio of 16.9 and an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 13.8 times, based on HSBC's 2025 estimates. According to HSBC, these figures represent a 28% and 24% discount to the median of its peer group based on 2025 consensus PE and EV/EBITDA, respectively.

HSBC's price target is derived from an adjusted present value (APV) valuation method, assuming a weighted average cost of capital (WACC) of 8.5%. The firm highlights GE HealthCare's engagement in less cyclical end markets and its potential for profit growth through solid management, strategic mergers and acquisitions, and self-help initiatives.

The firm also points out the company's promising prospects in artificial intelligence (AI) and innovation. These factors contribute to the positive outlook and the expectation of the company's stock performance.

However, HSBC also notes potential risks for GE HealthCare, including execution risks and the possibility of not meeting high market expectations. These factors are considered the main downside risks in their analysis of the company's future performance.

InvestingPro Insights

InvestingPro data showcases GE HealthCare Technologies Inc. (NASDAQ:GEHC) as a robust contender in its industry, with a current market capitalization of $37.87 billion and a price-to-earnings (P/E) ratio that has remained stable over the last twelve months, at approximately 27.27. This stability in valuation metrics is a testament to the company's consistent financial performance, which is also reflected in a solid gross profit margin of 40.52% during the same period.

Looking at the company's stock trends, GE HealthCare has been trading near its 52-week high, with the price hovering at 94.69% of this peak value. This aligns with HSBC's optimistic view and their set price target of $100.00. The InvestingPro Tips further reinforce this sentiment, highlighting GE HealthCare's strong return over the last three months, which stands at an impressive 16.33%, and the analysts' consensus that the company will be profitable this year, building on its profitability over the last twelve months.

For investors seeking more in-depth analysis, InvestingPro provides additional insights, including a total of 5 InvestingPro Tips for GE HealthCare, which delve into the company's market position and future profitability prospects. Interested readers can enhance their investment strategy by accessing these tips on the InvestingPro platform, and by using the coupon code PRONEWS24, they can enjoy 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.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.