Company Reports

Wide-moat GE HealthCare reported second-quarter earnings that were in line with our expectations. Revenue was $4.8 billion, or 1% year-on-year organic growth, with significant growth in pharmaceutical diagnostics. The company reduced its full-year guidance, updating its forecast for organic revenue growth to 1%-2% from 4% because of lower sales in China. We maintain our fair value estimate of $98 per share, and although the shares have rallied about 11% since the beginning of July, we think the current market price is still attractive.

We initiate coverage on GE HealthCare, or GEHC, with a wide moat rating and a fair value estimate of $98 per share. We think it is an attractive long-term investment, and we believe the company’s stand-alone status will allow management to focus on research and development and ensure its position as one of the top three global leaders in the medical imaging market remains secure in the long run.

Wide-moat GE HealthCare, or GEHC, is a top three global leader in the medical imaging market. It has a firmly established footprint in hospitals and health networks around the world, and it is positioned to benefit from long-term healthcare trends, including aging populations, the growing demand for early detection and monitoring of cancer and other diseases, and increasing utilization of minimally invasive and noninvasive procedures.