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Here's Why You Should Add GEHC Stock to Your Portfolio Right Now
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Key Takeaways
GE HealthCare is benefiting from record orders and a $23.9 billion backlog that boosts revenue visibility.
Pharmaceutical Diagnostics delivered 14.6% organic revenue growth, with EBIT margin reaching 29.6% in Q2.
GEHC's AI-enabled products could support mix and margin gains as commercialization starts accelerating.
GE HealthCare Technologies, Inc. (GEHC - Free Report) is well positioned for growth in the coming quarters, supported by record backlog and order momentum, continued strength in its Pharmaceutical Diagnostics business and an expanding pipeline of AI-enabled innovations that are expected to support long-term revenue and margin growth.
However, inflationary pressures, tariff-related uncertainty and higher input costs remain key risks that could weigh on profitability and temper margin expansion despite ongoing pricing and cost-mitigation efforts.
This Zacks Rank #2 (Buy) company’s shares have lost 18.8% year to date compared with the industry’s 21.6% decline. The S&P 500 composite has risen 12.7% over the same time frame.
Image Source: Zacks Investment Research
The renowned provider of medical technology, pharmaceutical diagnostics and digital solutions has a market capitalization of $33.8 billion. The company projects 7% growth for the next five years and expects to maintain its strong performance going forward. It delivered a trailing four-quarter average earnings surprise of 0.9%.
Factors Favoring GEHC’s Growth
Record Orders and Backlog Strengthen Revenue Visibility: GE HealthCare’s second-quarter order performance provides a strong foundation for future revenue growth. Organic orders increased 11.1%, the highest since the company’s spin-off in 2023, while book-to-bill reached a record 1.15X.
Backlog increased $2.6 billion year over year to a record $23.9 billion, providing substantial visibility into future equipment and service revenues. Management said the order growth was broad-based and not driven by significant one-time deals. Longer-cycle radiology orders should contribute more meaningfully in 2027, while ultrasound and interventional products could generate revenues sooner. This creates a multi-period revenue pipeline beyond the current quarter.
Pharmaceutical Diagnostics Is Combining Volume Growth With Strong Margins: Pharmaceutical Diagnostics remains one of GEHC’s strongest growth and profitability engines. Second-quarter organic revenues increased 14.6%, driven by strength in contrast media and U.S. radiopharmaceuticals, driving EBIT margin up 30 basis points year over year to 29.6%.
Demand for disease-specific tracers such as Vizamyl, DaTscan and Cerianna is benefiting from increasing adoption of advanced diagnostic and therapeutic approaches. Flyrcado is adding another growth layer, with weekly doses reaching 545, approximately 40% above April levels. Management also expects the contrast market to remain supply-constrained, supporting favorable industry fundamentals for GEHC.
New AI-Enabled Products Can Improve Both Growth and Margins: GEHC’s innovation cycle is increasingly combining clinical differentiation with improved economics. Products such as Vivid Pioneer, True Definition DL and Photonova Spectra incorporate AI or advanced software while leveraging common hardware platforms to reduce manufacturing costs.
Management said Vivid Pioneer is performing better than expected and delivering significantly higher gross margins than the previous platform. New products are also being introduced at higher value points, with customers willing to pay for productivity-enhancing features. Because these products currently represent less than 20% of the overall portfolio value, their increasing penetration provides room for both mix improvement and margin expansion as commercialization accelerates through late 2026 and 2027.
Service and Enterprise Solutions Are Deepening Customer Relationships: GEHC is increasingly shifting from individual equipment sales toward broader, integrated customer relationships combining imaging, services, software and workflow solutions. Service revenues increased 7.7% in the second quarter, benefiting from operational improvements and the Intelerad acquisition.
The company also secured an approximately $500 million agreement with Catholic Health covering equipment, service and process expertise, demonstrating the potential scale of enterprise-level engagements. GEHC’s D3 and Heartbeat strategies allow it to address disease states and productivity challenges across multiple departments rather than competing on individual devices. This approach can increase customer stickiness while creating opportunities to cross-sell equipment, maintenance, SaaS and AI-enabled solutions.
Factors That May Offset the Gains for GEHC
Inflation Continues to Restrict Near-Term Margin Expansion: GEHC’s adjusted EBIT margin declined 40 basis points in the second quarter to 14.2%, with inflation remaining a significant pressure point. Management identified memory chips, oil, freight and other components as major cost headwinds, with inflation creating approximately a 120-basis-point margin impact during the quarter.
While pricing and cost actions are beginning to offset these pressures, the mitigation has a time lag. This creates execution risk because the company needs continued pricing realization and productivity improvements to protect margins if commodity or component costs rise again. The issue is particularly relevant because GEHC’s full-year adjusted EBIT margin expansion target is only 10 to 40 basis points.
China Remains a Structural Headwind for 2026: China continues to constrain GEHC’s geographic growth profile. Management said second-quarter performance was in line with expectations but continues to assume a year-over-year decline in revenues from China for 2026. The company is navigating the expansion of volume-based procurement (VBP), evolving provincial budgets and pricing dynamics.
GEHC has responded by strengthening its portfolio, emphasizing clinical value propositions and establishing a provincial government-affairs organization, but management acknowledged that regional dynamics have not materially improved. Because China remains an important healthcare-equipment market, continued pricing pressure and procurement changes could limit growth and potentially pressure margins even as other international markets perform better.
GEHC is witnessing a positive estimate revision trend for 2026. In the past 30 days, the Zacks Consensus Estimate for earnings has moved north 4 cents to $4.93 per share.
The Zacks Consensus Estimate for third-quarter 2026 revenues is pegged at $5.36 billion, indicating a 4.2% rise from the year-ago quarter’s reported number. The consensus mark for EPS is pinned at $1.21, implying an increase of 13.1% year over year.
Veracyte, currently flaunting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted EPS of 54 cents, which surpassed the Zacks Consensus Estimate by 25.6%. Revenues of $150.3 million beat the Zacks Consensus Estimate by 4.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
VCYT has an estimated earnings growth rate of 8.4% for 2026. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 41.8%.
Globus Medical, currently carrying a Zacks Rank #2, reported a second-quarter 2026 adjusted earnings per share (EPS) of $1.34, which surpassed the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million beat the Zacks Consensus Estimate by 0.4%.
GMED has an estimated long-term earnings growth rate of 12.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 27.9%.
Neogen, carrying a Zacks Rank of 2 at present, reported second-quarter 2026 EPS of 9 cents, which beat the Zacks Consensus Estimate by 80%. Revenues of $225 million surpassed the Zacks Consensus Estimate by 6.3%.
NEOG has an estimated long-term earnings growth rate of 10%. NEOG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 56.97%.
View the Zacks #1 Rank List
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Here's Why You Should Add GEHC Stock to Your Portfolio Right Now
Key Takeaways
GE HealthCare Technologies, Inc. (GEHC - Free Report) is well positioned for growth in the coming quarters, supported by record backlog and order momentum, continued strength in its Pharmaceutical Diagnostics business and an expanding pipeline of AI-enabled innovations that are expected to support long-term revenue and margin growth.
However, inflationary pressures, tariff-related uncertainty and higher input costs remain key risks that could weigh on profitability and temper margin expansion despite ongoing pricing and cost-mitigation efforts.
This Zacks Rank #2 (Buy) company’s shares have lost 18.8% year to date compared with the industry’s 21.6% decline. The S&P 500 composite has risen 12.7% over the same time frame.
Image Source: Zacks Investment Research
The renowned provider of medical technology, pharmaceutical diagnostics and digital solutions has a market capitalization of $33.8 billion. The company projects 7% growth for the next five years and expects to maintain its strong performance going forward. It delivered a trailing four-quarter average earnings surprise of 0.9%.
Factors Favoring GEHC’s Growth
Record Orders and Backlog Strengthen Revenue Visibility: GE HealthCare’s second-quarter order performance provides a strong foundation for future revenue growth. Organic orders increased 11.1%, the highest since the company’s spin-off in 2023, while book-to-bill reached a record 1.15X.
Backlog increased $2.6 billion year over year to a record $23.9 billion, providing substantial visibility into future equipment and service revenues. Management said the order growth was broad-based and not driven by significant one-time deals. Longer-cycle radiology orders should contribute more meaningfully in 2027, while ultrasound and interventional products could generate revenues sooner. This creates a multi-period revenue pipeline beyond the current quarter.
Pharmaceutical Diagnostics Is Combining Volume Growth With Strong Margins: Pharmaceutical Diagnostics remains one of GEHC’s strongest growth and profitability engines. Second-quarter organic revenues increased 14.6%, driven by strength in contrast media and U.S. radiopharmaceuticals, driving EBIT margin up 30 basis points year over year to 29.6%.
Demand for disease-specific tracers such as Vizamyl, DaTscan and Cerianna is benefiting from increasing adoption of advanced diagnostic and therapeutic approaches. Flyrcado is adding another growth layer, with weekly doses reaching 545, approximately 40% above April levels. Management also expects the contrast market to remain supply-constrained, supporting favorable industry fundamentals for GEHC.
New AI-Enabled Products Can Improve Both Growth and Margins: GEHC’s innovation cycle is increasingly combining clinical differentiation with improved economics. Products such as Vivid Pioneer, True Definition DL and Photonova Spectra incorporate AI or advanced software while leveraging common hardware platforms to reduce manufacturing costs.
Management said Vivid Pioneer is performing better than expected and delivering significantly higher gross margins than the previous platform. New products are also being introduced at higher value points, with customers willing to pay for productivity-enhancing features. Because these products currently represent less than 20% of the overall portfolio value, their increasing penetration provides room for both mix improvement and margin expansion as commercialization accelerates through late 2026 and 2027.
Service and Enterprise Solutions Are Deepening Customer Relationships: GEHC is increasingly shifting from individual equipment sales toward broader, integrated customer relationships combining imaging, services, software and workflow solutions. Service revenues increased 7.7% in the second quarter, benefiting from operational improvements and the Intelerad acquisition.
The company also secured an approximately $500 million agreement with Catholic Health covering equipment, service and process expertise, demonstrating the potential scale of enterprise-level engagements. GEHC’s D3 and Heartbeat strategies allow it to address disease states and productivity challenges across multiple departments rather than competing on individual devices. This approach can increase customer stickiness while creating opportunities to cross-sell equipment, maintenance, SaaS and AI-enabled solutions.
Factors That May Offset the Gains for GEHC
Inflation Continues to Restrict Near-Term Margin Expansion: GEHC’s adjusted EBIT margin declined 40 basis points in the second quarter to 14.2%, with inflation remaining a significant pressure point. Management identified memory chips, oil, freight and other components as major cost headwinds, with inflation creating approximately a 120-basis-point margin impact during the quarter.
While pricing and cost actions are beginning to offset these pressures, the mitigation has a time lag. This creates execution risk because the company needs continued pricing realization and productivity improvements to protect margins if commodity or component costs rise again. The issue is particularly relevant because GEHC’s full-year adjusted EBIT margin expansion target is only 10 to 40 basis points.
China Remains a Structural Headwind for 2026: China continues to constrain GEHC’s geographic growth profile. Management said second-quarter performance was in line with expectations but continues to assume a year-over-year decline in revenues from China for 2026. The company is navigating the expansion of volume-based procurement (VBP), evolving provincial budgets and pricing dynamics.
GEHC has responded by strengthening its portfolio, emphasizing clinical value propositions and establishing a provincial government-affairs organization, but management acknowledged that regional dynamics have not materially improved. Because China remains an important healthcare-equipment market, continued pricing pressure and procurement changes could limit growth and potentially pressure margins even as other international markets perform better.
GE HealthCare Technologies Inc. Price
GE HealthCare Technologies Inc. price | GE HealthCare Technologies Inc. Quote
GEHC Estimate Trend
GEHC is witnessing a positive estimate revision trend for 2026. In the past 30 days, the Zacks Consensus Estimate for earnings has moved north 4 cents to $4.93 per share.
The Zacks Consensus Estimate for third-quarter 2026 revenues is pegged at $5.36 billion, indicating a 4.2% rise from the year-ago quarter’s reported number. The consensus mark for EPS is pinned at $1.21, implying an increase of 13.1% year over year.
Other Key Picks
Some other top-ranked stocks from the broader medical space are Veracyte (VCYT - Free Report) , Globus Medical (GMED - Free Report) and Neogen (NEOG - Free Report) .
Veracyte, currently flaunting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted EPS of 54 cents, which surpassed the Zacks Consensus Estimate by 25.6%. Revenues of $150.3 million beat the Zacks Consensus Estimate by 4.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
VCYT has an estimated earnings growth rate of 8.4% for 2026. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 41.8%.
Globus Medical, currently carrying a Zacks Rank #2, reported a second-quarter 2026 adjusted earnings per share (EPS) of $1.34, which surpassed the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million beat the Zacks Consensus Estimate by 0.4%.
GMED has an estimated long-term earnings growth rate of 12.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 27.9%.
Neogen, carrying a Zacks Rank of 2 at present, reported second-quarter 2026 EPS of 9 cents, which beat the Zacks Consensus Estimate by 80%. Revenues of $225 million surpassed the Zacks Consensus Estimate by 6.3%.
NEOG has an estimated long-term earnings growth rate of 10%. NEOG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 56.97%.