GE HealthCare new overweight at Piper Sandler on post-spinoff growth
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Piper Sandler has initiated GE HealthCare Technology with an overweight rating saying that its spinoff from its parent company should lead to faster growth and improved profitability.
The firm has a $95 price target (~11% upside based on Wednesday's close).
Analyst Jason Bednar said GE HealthCare (NASDAQ:GEHC) is poised for top-line growth due to a significant backlog of more than $14B and new product flow given an increase in R&D investment. R&D spend increased 25% year over year in 2022.
As a result, he added the company has the potential to achieve long-term low-double digit+ EPS growth.
Bednar also likes the company's free cash flow, which he sees as topping $1.3B this year. He noted that management has indicated interest in M&A to support growth.
Although the stock has increased ~50% since its spinoff from General Electric (GE) in January, Bednar sees shares having more room to run as management executes against 2023 guidance -- which he called possibly conservative -- as well as focusing on 2025 financial targets.
Read why Seeking Alpha contributor GS Analytics rates GE HealthCare (GEHC) a buy.