GE HEALTHCARE TECHNOLOGIES INC. (GEHC): what the price requires

At today's price, GE HEALTHCARE TECHNOLOGIES INC. (GEHC) is priced for +7.9% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/GEHC

Headline

FieldValue
TickerGEHC
CompanyGE HEALTHCARE TECHNOLOGIES INC.
Current price$65.21/sh
CompositionSales of products 66% / Sales of services 34%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed8.3%
Operating margin today12.2%
Margin compression implied-3.9pp
Implied growth7.9%
Multiple paid15x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.2pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+1.25σ
cohort percentile (of 112 peers)28
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; growth-DCF land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.39x5expensive
Earnings1.45x3expensive
Relative0.71x3justifies
Growth7.87x2expensive

Families that justify the price: Relative Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.

Per-Model Detail (n=13)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$4.5114.46xyesReference only (OCF-based, capex excluded): OCF $0.4B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$91.840.71xyesP/E 24x (static sector reference · 2026-04), scenarios: 20.0x / 24.0x / 28.0x (bear / base = reference held flat / bull), EV/EBITDA 16x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$45.161.44xyesBV/sh $23.34, ROE (TTM) 17.9%, ke 9.3%
Two-Stage Excess ReturnAsset$62.011.05xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$51.201.27xyesRev $21.0B, growth 6% (input: historical growth; tapered), Terminal P/S: 1.2x / 1.4x / 1.7x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$45.131.44xyesNormalized EBIT (4y avg op income, one-time charges added back) $2.80B × (1−19%) / WACC 7.9% → EPV (no growth)
Residual IncomeAsset$61.711.06xyesBV $23.34 + 5yr PV of (ROE (TTM) 17.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$46.801.39xyes√(22.5 × EPS $4.17 × BVPS $23.34) — Graham's conservative floor
EV/EBITDA RelativeRelative$77.350.84xyesEBITDA $2.73B × sector EV/EBITDA 16.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$3.4918.68xyesEPS $4.17 × (8.5 + 2×-5.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$6.549.97xyesBV $23.34 × (ROIC 2.2% / WACC 7.9%)
P/Sales SectorRelative$183.620.36xyesRevenue $20.98B × sector P/S 4.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$45.081.45xyesEPS $4.17 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$7.9b
Net debt / NOPAT (after-tax)3.97x
Net debt / operating income (pre-tax)3.23x
Share count CAGR (dilution)0.2%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The valuation models read GE HealthCare as a slightly rich industrial, but they miss what the business actually is: an installed-base razor-and-blade franchise where the value compounds in the recurring half, not the equipment sale. The company sells MRI, CT, ultrasound, and molecular-imaging systems (products are about two-thirds of revenue) and then earns service, parts, and consumables on those machines for their decade-plus operating lives, the services third of the mix. The 10-K reports segment performance on Segment EBIT, income before income taxes adjusted for items management excludes (FY2025 10-K, accession 0001932393-26-000007), and the durable economics live in that recurring service stream a snapshot multiple cannot capture. Once a hospital installs a GE scanner, it is a service-and-consumables annuity for years.

The demand backdrop is strong even with the recent margin wobble. Q1 2026 revenue reached $5.1 billion with 2.9% organic growth, led by Pharmaceutical Diagnostics (including the new cardiac imaging agent Flyrcado), Advanced Visualization Solutions, and imaging, plus services. Management cited healthy global demand for capital equipment, resilient procedure growth, and a record backlog of $21.8 billion, which is the order book that converts to future revenue. An aging global population and rising imaging utilization are secular tailwinds that underpin the installed-base growth.

The financial profile supports patience. GE HealthCare runs a roughly 18% trailing return on equity against a 9% cost of equity, generates substantial cash (free-cash-flow guidance of $1.6 billion for 2026), and carries net debt near 3x operating income, manageable for a stable medtech. Flyrcado is a genuine new-product catalyst in cardiac PET imaging, and the AI-enabled diagnostics roadmap extends the software and services attach. The methods that anchor to current earnings understate a business whose real value is the multi-year service annuity riding on top of every system sold and the record backlog waiting to convert.

Bear Case

The most honest way to frame the bear case is to let the valuation methods disagree and ask which are telling the truth. The relative-multiple method, on a sector-median 24x P/E, lands near $92 and supports the price. But the growth-DCF, the earnings-power frame, and the asset-based models are far less generous: earnings-power value lands near $46, the simple excess-return model near $45, the Graham number near $47, and the discounted-future-market-cap method near $48. When the only frame that comfortably justifies the price is the one that assumes GE HealthCare deserves the sector's average multiple, and every frame anchored to its own cash generation lands a quarter or more below the price, the conservative methods are usually the more honest read.

The near-term results give those conservative frames support. Despite reaffirming organic revenue growth of 3.0% to 4.0% for 2026, management cut its adjusted EBIT margin guidance to 15.4% to 15.7% from 15.8% to 16.1% and reduced full-year adjusted EPS by $0.15, citing tariff expenses and supplier quality issues. The stock fell about 9% on the print. Tariffs are expected to cost less than $250 million in 2026, front-loaded into the first quarter, but they expose a structural vulnerability: GE HealthCare has a global, hardware-heavy supply chain that trade policy can tax directly, and margin guidance that moves down rather than up is the wrong direction for a stock priced at the sector multiple.

The demand side carries its own risk. Capital-equipment sales to hospitals depend on health-system budgets, which tighten when reimbursement pressures or economic stress hit, and a record backlog can convert more slowly if customers defer large purchases. The China market, an important growth region historically, has been volatile. The earnings-power value near $46, marking the business at no growth, is well below the $62 price, a reminder that without continued growth and margin recovery the static value sits far lower. At a price that needs the sector multiple and a margin rebound to hold, GE HealthCare has limited cushion if tariffs persist, supply-chain quality issues recur, or capital-equipment demand softens.

Valuation

Inverting the $61.60 price puts the embedded bet at roughly 6.6% operating-income growth against a current operating margin near 12.6%, with the price-implied margin near 7.6%, a read the engine characterizes as within historical range.

The model X-ray is split, and the split is the story. The relative-valuation method lands near $92 on a sector-median 24x P/E and the EV/EBITDA-relative method near $77, both above the price. Against those, the static frames land well below: earnings-power value near $46 capitalizing normalized EBIT, the simple excess-return model near $45 off a $23.34 book value with a 17.9% trailing ROE, the Graham number near $47, residual income and two-stage excess return near $62, and the earnings-yield method near $45. The blended landing across applicable methods is near $54, modestly below the price. The free-cash-flow frames are skipped or distorted because reported FCF is depressed by the spin-off-period working-capital and capex profile, so the relative and growth frames carry the weight.

The characterization is that the price is justified by the relative multiple while the growth-DCF and several conservative frames say expensive. The peer set, SYK, BDX, SOLV, RMD, and MDT, is the medtech cohort where mid-20s multiples on stable, installed-base businesses are normal, so GE HealthCare's sector-median multiple is not an outlier. The investable question is whether the margin recovery the price assumes actually arrives: management just cut margin guidance on tariffs and supplier issues, and the static frames anchored to current earnings sit a quarter or more below the price. If imaging demand, the record $21.8 billion backlog, and Flyrcado drive the margin back up, the relative frame is the right anchor; if tariffs and supply-chain costs persist, the conservative frames near $45 to $54 mark where the downside lives. Net debt near 3x operating income is serviceable but is not a cushion against a margin miss.

Catalysts

GE HealthCare reported Q1 2026 on April 29, with revenue of $5.1 billion and 2.9% organic growth led by Pharmaceutical Diagnostics (including Flyrcado), Advanced Visualization Solutions, imaging, and services. The stock fell about 9% because management, while reaffirming organic revenue growth of 3.0% to 4.0%, cut adjusted EBIT margin guidance to 15.4% to 15.7% and reduced full-year adjusted EPS by $0.15 on tariff expenses and supplier quality issues. Free-cash-flow guidance is $1.6 billion for the year, and the backlog reached a record $21.8 billion.

The key swing factors are tariffs and the margin trajectory. The tariff impact, expected under $250 million for 2026 and front-loaded into the first quarter, is the variable to watch, since management expects it to trail down through the year; whether margins recover as it fades is the central question for a stock priced at the sector multiple. Flyrcado's ramp in cardiac PET imaging and the AI-enabled diagnostics roadmap are the product catalysts, and the conversion of the record backlog is the demand signal. Health-system capital-equipment budgets and the China market are the macro variables that determine whether the 3% to 4% organic growth holds.

Sources: GE HealthCare Q1 2026 results and call (investor.gehealthcare.com, StockTitan, Investing.com, AOL transcript, 2026); FY2025 10-K (accession 0001932393-26-000007).

Peer Cohorts (Per Segment, With Filing Citations)

Imaging (reported)

Advanced Visualization Solutions (AVS) (reported)

Patient Care Solutions (PCS) (reported)

Pharmaceutical Diagnostics (PDx) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive GEHC report on boothcheck