UBS cuts GE HealthCare rating to sell, citing "margin disappointments ahead"

Investing.com -- Shares in GE HealthCare Technologies (NASDAQ:GEHC) slipped in premarket U.S. trading on Monday after analysts at UBS gave the medical technology group their only "sell" rating.

In a note to clients lowering their outlook for the stock down from "neutral," the UBS analysts flagged what they described as an "unappealing" near-term risk-to-reward profile at the Chicago-based spin-off of conglomerate General Electric (NYSE:GE).

They also slashed their 12-month price target for the company to $66 from $86 and reduced their forecasts for revenue growth from 2023 to 2027, citing "softer" recent order momentum, "tough" comparisons, and a "lack of pricing tailwinds."

"[W]e believe it will take several years of higher [research and development] before [the company] can credibly compete in the higher-margin, premium end of the Imaging market," they added.

GE HealthCare is made up of four medical device units, imaging equipment, patient care solutions, pharmaceutical diagnostics and ultrasound devices. Imaging is the largest of these divisions.

The comments come after GE HealthCare posted better-than-anticipated third-quarter profit and raised the lower end of its annual adjusted profit guidance. The company has been boosted by a surge in demand for medical equipment following a post-pandemic spike in elective surgeries like hip and knee replacements.