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Mizuho initiated coverage on GE HealthCare Technologies Inc (NASDAQ:GEHC) with a Buy rating and $90.00 target after receiving positive feedback from a proprietary radiology survey, as well as positive checks from hospital surveys.
The radiology survey found that radiology volumes are expected to improve +6-8% in 2023 despite staffing constraints. The survey also found that 84% of sites have capital budgets that are unchanged or higher versus the prior 2-years. Half of all sites surveyed have plans to purchase multiple systems in 2023 led by CT and MRI. GEHC held 48% share among the sample and is the preferred vendor of more than half of them. Analysts expect GEHC to edge out competition for new box orders across CT, MRI, Ultrasound, and X-ray next year.
Mizuho models GEHC at an adj EPS CAGR of 12.5% with upside to mid-teens as they contemplate top-line tailwinds, operating leverage initiatives, and below-the-line items. On revenue, GEHC’s outlook is for growth of 4-7% into the medium-term, but Mizuho sees potential for upside closer to high-single digits.
They wrote in a note, “We still see upside ahead for the stock on: 1) increased demand for imaging coming out of the pandemic, 2) an aging EU install base that points toward a substantial upgrade cycle, 3) a multi-year CT adoption cycle in China that should see ~20k new sockets installed over 10-years, and 4) MRI demand from the recent US launch of Leqembi to treat Alzheimer’s disease (AD) after Jan 2023 FDA clearance.”
Shares of GEHC are up 2.39% in afternoon trading on Friday.
