Here's Why You Should Retain GEHC Stock in Your Portfolio for Now

GE HealthCare Technologies, Inc. GEHC is well-poised for growth in the coming quarters, courtesy of its continued focus on innovations. The optimism, led by strong fourth-quarter 2025 performance and acquisitions, healthy capital investment trends, commercial execution and demand for new products, is expected to contribute further. However, tariffs, profitability pressures from mix and investment and uneven regional demand are concerning.

This Zacks Rank #3 (Hold) company’s shares have gained 0.2% in the past six months against the industry’s 20.4% decline and the S&P 500 Composite’s 0.5% fall.

The renowned provider of medical technology, pharmaceutical diagnostics and digital solutions has a market capitalization of $31.78 billion. The company projects 9.1% 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 7.52%.

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Factors Favoring GEHC’s Growth

Robust Backlog & Enterprise Deal Momentum: GE HealthCare entered 2026 with a record backlog of $21.8 billion and a book-to-bill ratio consistently above 1, reinforcing strong visibility into future revenues. This momentum is driven by steady global demand for imaging equipment, radiopharmaceuticals and advanced ultrasound solutions. Order trends remain solid across the United States and Europe, while the Asia-Pacific region continues to grow, supported by an expanding installed base and increased adoption of new product innovations (NPIs). The backlog reflects a mix of replacement demand for aging systems and incremental uptake of newer, higher-margin technologies like photon-counting CT and advanced cardiac CT platforms.

Furthermore, multi-year enterprise agreements encourage backlog expansion. Since its spin, GEHC has secured more than $7 billion in enterprise deals globally, including collaborations with Sutter Health, the Ministry of Health in Indonesia and a 20-year partnership with Nuffield Health. Overall, this robust order pipeline and enterprise agreements enhance multi-year growth visibility, help smooth near-term revenue fluctuations and underscore customer confidence.

Pharmaceutical Diagnostics Emerging as a High-Growth Engine: The Pharmaceutical Diagnostics segment continues to be a standout performer, delivering double-digit organic revenue growth of 12.7% in fourth-quarter 2025. Growth was driven by strong global demand for contrast media, effective pricing execution and increasing adoption of radiopharmaceuticals, particularly in PET imaging.

A key contributor is Flyrcado, GE HealthCare’s novel myocardial perfusion tracer, which is scaling steadily with improving delivery reliability and expanding customer adoption. Management reiterated confidence in achieving $500 million or more in revenues by 2028, with a longer-term opportunity reaching $1 billion. The broader shift toward PET imaging, supported by clinical recommendations favoring PET over SPECT, further strengthens the segment’s growth outlook.

GE HealthCare’s ability to combine imaging equipment with contrast agents and radiopharmaceuticals under its “D3” framework differentiates its offering, enabling more integrated diagnostics and positioning the company to capture recurring revenue streams tied to imaging utilization.

Innovation-Led Growth Driven by Strong New Product Vitality: Innovation remains a central pillar of GE HealthCare’s growth strategy, with new products accounting for 55% of total revenues, reflecting a strong vitality rate and successful commercialization of recent launches. The company continues to advance a robust pipeline of next-generation technologies across imaging and diagnostics.

Key innovations include the Photonova Spectra photon-counting CT, Signa MR with Freelium, LOGIQ ultrasound systems and the Vivid Pioneer cardiovascular ultrasound system, all of which are contributing to growth across segments. In addition, new product introductions in nuclear medicine and theranostics, such as total body PET and next-generation SPECT systems, are expanding GE HealthCare’s presence in high-growth clinical areas.

Management emphasized that persistent investment in innovation, combined with disciplined execution through its Heartbeat operating system, is enabling faster product launches, improved customer adoption and enhanced competitive positioning. These advanced technologies not only support revenue growth but also strengthen the company’s ability to drive long-term margin expansion and capture future demand in precision care.

Factors That May Offset the Gains for GEHC

Tariff Pressures Weighing Margins & Earnings: Tariffs remain a significant near-term headwind for GE HealthCare. In fourth-quarter 2025 alone, tariffs reduced adjusted EBIT by $100 million and lowered adjusted EPS by 17 cents. For the full year, the impact was even more pronounced, totaling around $245 million to EBIT and 43 cents to adjusted EPS, although management expects the impact to be lower in 2026 due to mitigation efforts. Steps such as diversifying sourcing and suppliers have reduced some exposure, but uncertainty surrounding U.S.-China trade relations remains a risk. Any escalation in tensions or the introduction of new tariffs could put additional pressure on margins, offsetting productivity improvements.

Moreover, tariffs make pricing strategies more challenging, especially in highly competitive imaging markets where customers are sensitive to price changes. As a result, this structural headwind may introduce earnings volatility and limit margin expansion if the company’s mitigation measures reach their limits.

Margin Pressure From Unfavorable Mix & Continued Investment: Beyond tariffs, GE HealthCare is facing margin pressure from unfavorable business mix and sustained investment in innovation. Segment profitability was impacted by mix dynamics, particularly within Patient Care Solutions, as well as by inflationary pressures and planned investments in new product introductions (NPIs).

In the Pharmaceutical Diagnostics segment, margins declined year over year due to continued investment in innovation and the impact of recent acquisitions. In other segments, productivity gains and pricing were partially offset by these cost headwinds. While these investments are critical to support long-term growth and competitiveness, they create near-term pressure on profitability and limit the pace of margin expansion.

Regional and Segment-Specific Weakness: Despite overall strong demand in key markets, GE HealthCare highlighted areas of softness that could weigh on near-term growth. The company expects a cautious outlook in China, reflecting macroeconomic and market uncertainties that could impact demand trends in the region.

Performance in certain segments remains uneven. Patient Care Solutions reported a year-over-year revenue decline, caused by weakness in Life Support Solutions, even if sequential improvement was observed. Order growth also moderated in fourth-quarter 2025 to 2%, compared to stronger growth in the prior-year period, reflecting tougher comparisons and variability in large deal timing. These factors point to a degree of volatility across regions and business lines, which could temper growth momentum despite strong fundamentals in core markets.

GE HealthCare Technologies Inc. Price

GE HealthCare Technologies Inc. price | GE HealthCare Technologies Inc. Quote

Estimate Trend of GEHC

GEHC is witnessing a stable estimate revision trend for 2026. In the past 60 days, the Zacks Consensus Estimate for earnings has moved north to $5.01 per share.

The Zacks Consensus Estimate for first-quarter 2026 revenues is pegged at $5.04 billion, indicating a 5.5% rise from the year-ago quarter’s reported number. The consensus mark for EPS is pinned at $1.06, implying an increase of 4.9% year over year.

Stocks to Consider

Some better-ranked stocks from the same medical industry are Phibro Animal Health PAHC, Intuitive Surgical ISRG and Cardinal Health CAH.

Phibro Animal Health, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 44.9% for 2026. You can see the complete list of today’s Zacks #1 Rank stocks here.

PAHC’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 20.1%. PAHC’s shares have climbed 41.4% in the past six months.

Intuitive Surgical, carrying a Zacks Rank #2 (Buy), has an estimated growth rate of 12.6% for 2026.

ISRG’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 13.2%. ISRG’s shares have gained 9.1% in the past six months.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 25.1% for 2026.

CAH delivered a trailing four-quarter average earnings surprise of 9.3%. CAH’s shares have rallied 38.5% in the past six months.

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This article originally published on Zacks Investment Research (zacks.com).

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