UBS initiated coverage of Swedish medical equipment maker Getinge AB with a neutral rating, citing quality issues as largely reflected in the stock price but warning of competitive pressures from Chinese rivals.
The bank set a base price target of 255 Swedish kronor, aligning with its bull-case scenario where sustained growth in accelerator categories offsets detractors. A bear-case scenario targets 180 SEK, factoring in intensified competition and slower-than-expected acceleration, implying a 2.5% compound annual growth rate (CAGR) in revenue versus 6.0% in the bull case.
Getinge’s portfolio is divided into Growth Accelerators, Stable Compounds, and Growth Detractors, with the former expected to rise from under 30% of sales in 2025 to nearly 35% by 2030. Revenue CAGR is projected at 5% from 2026 to 2030, up from 3% between 2017 and 2025, while earnings per share CAGR is seen at 12%, improving from 5% in the prior period.
UBS estimates Getinge trades at 20.0 times projected 2026 earnings, a roughly 20% premium to the broader European medtech sector’s 10%-11% multiple. The valuation discount to peers has narrowed from up to 40% in 2015 to about 10%-20% in recent years.
Quality concerns tied to a 2015 U.S. FDA consent decree have weighed on the company, with remediation costs totaling nearly 20% of cumulative free cash flow since then. Future extraordinary quality costs are projected to decline to about 400 million SEK by 2029-2030, equating to 8%-9% of projected free cash flow. Mentions of the decree and FDA inspections in earnings calls have fallen over 90% since 2015, reflecting progress in addressing manufacturing deficiencies.
Getinge operates through three divisions: Acute Care, Life Science, and Surgical Workflows.
