GE Healthcare Technologies Inc "From Sell to Neutral, but still hurdles to..."

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GE Healthcare Technologies Inc "From Sell to Neutral, but still hurdles to..."

Forecast returns

Forecast price appreciation 12.0%

Forecast dividend yield 0.2%

Forecast stock return 12.3%

Market return assumption 9.1%

Forecast excess return 3.2%

Company Description

GE Healthcare Technologies is a global medical device provider that designs, develops,

manufactures, and distributes diagnostic imaging and clinical systems; products and services

for drug discovery, biopharmaceutical manufacturing, and cellular technologies; imaging

agents used during medical scanning procedures; and a range of healthcare IT solutions. It

generates 70% of revenue from medical imaging, where it is the second-largest player

globally. The business spun off from parent company GE in late 2022 and is headquartered in

Chicago.

Valuation Method and Risk Statement

We use a DCF valuation to value GE Healthcare Technologies, assuming a WACC of 9.0%, TG

1.5%.

Key upside risks to our assumptions include the following: 1) Flyrcado launch accelerates

beyond our and sellside estimates. 2) PCCT launch drives rapid uptake and share gains, lifting

Imaging margins in the process. 3) Chinese competitors do not gain ground through their

internationalization. 4) GEHC new product launches drive share gains in core imaging and

ultrasound businesses. 5) Alzheimer's developments drive an acceleration in demand for

Pharmaceutical Diagnostics and also for equipment used to diagnose and monitor the

disease. 6) Management continues to deliver cost savings beyond the initial IPO-related

reduction in transaction services agreements.

Downside risks to GE Healthcare include: 1) Hospital capex: there is a risk that hospital

budgets could be lowered due to macro concerns, and lead to a decline in the purchasing of