Life Sciences & Diagnostic Tools: Valuation check-in: Where Tools sit heading into 2Q

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Life Sciences & Diagnostic Tools: Valuation check-in: Where Tools sit heading into 2Q

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Life Sciences & Diagnostic Tools

Valuation check-in: Where Tools sit

heading into 2Q

Industry Overview

Tools rerates from April lows; Where do we go from here? 17 July 2026

Despite remaining down ~5% YTD (vs. SPX +9%), the Tools index (S5LSTSX) has Equity

rebounded sharply from the April lows (+18% vs SPX +6%), supported by strong biotech United States

funding trends (see our report for: more on funding), constructive China LS R&D demand Life Sciences & Diagnostic Tools

(see note: on the health of China market), resilient Pharma spending, stabilizing A&G Michael Ryskin

markets, and growing enthusiasm around potential incremental upside drivers such as Research Analyst

Semis (see our note: on the Semi rally here). At the same time, valuations have moved BofAS+1 646 855 4373

higher and are no longer at the troughs seen in April, though they still remain below the michael.ryskin@bofa.com

peaks reached ahead of the 4Q selloff. We continue to see opportunities for the group to Lu Li

Research Analyst

outperform, but the bar has clearly moved higher since post-1Q, and further upside will BofAS

require confirmation of the long-awaited ‘return to normal’ (i.e., mid single digit growth +1 646 855 4645 lu.li5@bofa.com

or better).

Avantika Dhabaria

BofASTools outperformance driven by handful of stocks +1 646 743 0170

Since the April and June rallies, Tools has outperformed both Healthcare (S5HLTH; +11% avantika.dhabaria@bofa.com

/ +10%) and MedTech (S5CHEP; -4% / +6%) (see Exhibit 1), with Tools now trading at a Alexa Chan

~20% premium to MedTech: a notable reversal from earlier this year (see Exhibit 2) Research Analyst BofAS