GE HealthCare Earnings: Despite Conservative Guidance, Profit Margin Continues to Improve

Wide-moat GE HealthCare reported fourth-quarter earnings that were in line with our expectations, with growth in the US and the patient diagnostics business offset by continued softness in China markets. Guidance was below our expectations, although we think management is baking in conservative expectations related to China’s rebound and the potential impact of any tariffs imposed by the US on China imports. We maintain our fair value estimate of $98 per share, and given recent market appreciation, we now view the stock as fairly valued.