Medtech Monthly "Performance out in the cold, but interest warming up" Doyle

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Medtech Monthly "Performance out in the cold, but interest warming up" Doyle

Our top picks

FigureSource:UBS4: estimates,UBS coverageDatastreaminasorderof 29 Juneof preferenceUBS2026

Top Buys:

Convatec: Top pick. Trading at 14.0x 2026E PE or c.20% sector discount despite above-

sector earnings growth historically (10% CAGR vs. 2% sector average since 2022) and

going forward (UBSe c.11.5% 2026-30 CAGR vs. c.10.5% sector average). We think

this delivery is supported by a resilient business model (90% of revenues recurring) and

plenty of optionality (up to 3% potential upside to our 2030 estimates from new

product launches and M&A).

Philips: Preferred turnaround story. We think the business is healthier than it has been in

recent history, with accelerating order growth derisking mid-single-digit revenue

growth, the product pipeline reinvigorated, litigation overhangs fully addressed, and

plenty of contingency baked into near- and medium-term margin targets. Still, the

PE discount to the sector is 15% and not far off the historical average discount outside

the most intense recall period, despite the much improved portfolio and cost base.

Top Sells:

Elekta: Our structural, data-backed Sell thesis argues radiotherapy patient and

procedure volumes are slowing in developed markets, on top of which our deep-dive

portfolio analysis suggests Elekta will struggle to gain share in a slowing market. This

leaves us 4-12% below consensus EBIT over the medium term.

Fresenius Medical Care: Our analysis leads us to expect a long-term earnings fade

driven by a lack of recovery in near-term US dialysis volumes, and a decline in the longer

term: we do not believe either of these risks are fully appreciated by investors, and hence

think that these structural dynamics will cap the multiple.