Here's Why You Should Add GEHC Stock to Your Portfolio for Now

GE HealthCare Technologies, Inc. GEHC 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 9.2%% in the year to date comapred with the industry’s 13.9% decline and the S&P 500 Composite’s 11.7% increase.

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%.

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Factors Favoring GEHC’s Growth

Record Backlog and Enterprise Wins Strengthen Growth Visibility: GE HealthCare's record order performance and expanding enterprise partnerships continue to strengthen its long-term growth outlook. In second-quarter 2026, orders grew 11.1%, the highest since the company's spin, while the book-to-bill ratio reached 1.15 and backlog climbed to a record $23.9 billion, up $2.6 billion year over year. Management highlighted that demand remained broad-based across CT, MR, ultrasound, molecular imaging, patient monitoring and interventional solutions, supported by stronger commercial execution rather than one-time deal activity.

The company is also expanding multi-year enterprise relationships, including an approximately $500 million agreement with Catholic Health in New York and an integrated oncology partnership with University Hospital Essen in Germany. These long-term agreements, combined with a growing recurring service backlog, improve revenue visibility and position GE HealthCare to benefit from sustained equipment modernization and workflow optimization initiatives across global healthcare systems.

Pharmaceutical Diagnostics Continues to Drive High-Growth Performance: The Pharmaceutical Diagnostics business remains GE HealthCare's strongest growth engine, fueled by robust demand for contrast media and radiopharmaceuticals. The segment delivered 14.6% organic revenue growth in the second quarter, benefiting from higher procedure volumes, pricing strength and accelerating adoption of disease-specific tracers.

Management highlighted strong performances from Vizamyl, DaTscan and Cerianna, while Flyrcado continued scaling with weekly doses reaching 545 by late July, roughly 40% above April levels. The company also onboarded additional customers that are expected to drive higher utilization during the second half of 2026. Management reaffirmed confidence in Flyrcado reaching at least $500 million in annual revenues by 2028, while emphasizing that expanding PET imaging adoption and GE HealthCare's integrated D3 strategy of combining imaging systems, contrast agents and digital capabilities continue to strengthen recurring revenue opportunities.

AI-Enabled Innovation Pipeline Supports Long-Term Growth and Margins: GE HealthCare's expanding innovation pipeline continues to strengthen both competitive positioning and long-term margin expansion. Management emphasized that recently launched AI-enabled products, including Photonova Spectra photon-counting CT, True Definition DL CT software, Vivid Pioneer cardiovascular ultrasound and upgraded MR platforms, are driving stronger customer adoption while supporting higher pricing and improved manufacturing economics.

The company noted that its platform-based product development approach lowers production costs while delivering differentiated AI capabilities that enhance customer productivity. Although many longer-cycle imaging products are expected to contribute more meaningfully to revenues in 2027, management believes the combination of stronger commercial execution, faster product launches through its Heartbeat operating system and higher-margin software subscriptions will continue supporting sustainable growth and profitability over the medium term.

A Factor That May Offset the Gains for GEHC

Inflation and Tariff Uncertainty Remain Near-Term Margin Headwinds: While GE HealthCare has made meaningful progress in offsetting tariff impacts, inflationary pressures and macro uncertainty remain key risks to margin expansion. In the second quarter, adjusted EBIT margin declined 40 basis points year over year as higher costs for memory chips, oil, freight and other components weighed on profitability, with inflation creating an estimated 120-basis-point headwind.

Although tariff refunds helped make the year-over-year tariff impact neutral during the quarter, management maintained its full-year EPS guidance despite the benefit, citing ongoing uncertainty around input costs and the need for additional pricing and cost actions. The company continues to diversify sourcing, improve supply-chain efficiency through its Heartbeat operating system and implement pricing initiatives, but any renewed escalation in tariffs or sustained inflation could pressure margins and limit earnings growth.

GE HealthCare Technologies Inc. Price

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

Estimate Trend of GEHC

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 Stocks to Consider

Some other top-ranked stocks from the broader medical space are Globus Medical GMED, West Pharmaceutical WST and The Cooper Companies COO.

Globus Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted 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%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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%.

West Pharmaceutical, carrying a Zacks Rank #2 at present, reported second-quarter 2026 adjusted EPS of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.

WST has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.4%.

The Cooper Companies, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2026 adjusted EPS of $1.21, which beat the Zacks Consensus Estimate by 10%. Revenues of $1.08 billion beat the Zacks Consensus Estimate by 2.6%.

COO has an estimated long-term earnings growth rate of 8.3%. COO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.8%.

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

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