UBS initiated coverage of Swedish medical equipment maker Getinge AB with a neutral rating and a SEK 255 price target, citing concerns that the market has already priced in quality issues at the company.
The brokerage estimates Getinge's shares would trade at 20.0 times its 2026 earnings under its discounted cash flow model, a roughly 20% premium to the broader medtech sector. UBS noted that Getinge's valuation discount to European medtech peers has narrowed from as much as 40% in 2015 to about 10%-20% in recent years, with market attention to quality issues having diminished by over 90% since then.
Getinge operates through three divisions: Acute Care, Life Science, and Surgical Workflows. UBS categorized its portfolio into growth accelerators, steady compounders, and growth detractors. The broker expects growth accelerators—including transplant care and ECMO/ECLS systems—to expand from under 30% of sales in 2025 to nearly 35% by 2030.
UBS forecasts a 5% revenue compound annual growth rate (CAGR) and 12% earnings-per-share (EPS) CAGR for Getinge from 2026 to 2030, compared with 3% revenue growth and 5% EPS growth from 2017 to 2025. The medtech sector's broader EPS growth is projected at 10%-11% through 2030.
The broker set a downside scenario price target of SEK 180, implying a 2.5% revenue CAGR if competition intensifies or growth in accelerator categories slows. An upside scenario maintains the SEK 255 target, contingent on sustained growth in accelerators and stabilization in detractor categories, which would support a 6.0% revenue CAGR.
Getinge entered a consent decree with the U.S. Food and Drug Administration in February 2015 following manufacturing practice deviations at four facilities. Remediation costs have totaled nearly 20% of the company's cumulative free cash flow since 2015. UBS estimates that even if Getinge reduces extraordinary quality costs to about SEK 400 million by 2029 or 2030, such costs would still represent 8%-9% of forecast free cash flow.
