UBS told clients on Thursday that some prominent European MedTech names show limited room for upside as the current quarterly reporting season approaches, even as the broader industry shows tentative signs of stabilisation after several challenging months.
The brokerage highlighted Straumann and GE Healthcare as two companies where risk/reward may be skewed to the downside heading into Q1 results.
For Straumann, UBS acknowledged that sellside projections calling for 5.6% organic growth in the quarter appear achievable, but emphasised it does not expect material upside to those estimates. UBS pointed to the U.S. organic growth estimate of 7.4% as an example of a stretched assumption. The company’s Q1 sales release is scheduled for 29 April, and UBS noted that broader macroeconomic concerns add to the uncertainty.
On GE Healthcare, UBS reported it sits below consensus on margin expectations and flagged a number of issues it does not expect to be resolved by the Q1 announcement. Those include ongoing concerns related to China, the ramp of Flyrcado and continued competition for Omnipaque. GE Healthcare is also due to publish Q1 results on 29 April.
The brokerage added that recent reductions in negative positioning among investors have lifted the effective bar for upcoming results. UBS models Q1 organic revenue growth of just under 2.5% and anticipates margins contracting by 90 basis points, compared with sellside consensus margin falls of 50-60 basis points.
UBS also set out a group of names it views more positively, identifying Alcon, Biomerieux and Fresenius SE as having comparatively favourable setups as they approach their next reporting dates.
For Alcon, UBS projects Q1 organic growth of 7%, slightly above sellside consensus of 6.5% and at the top end of the company’s full-year guidance range of 5-7% on a constant currency basis. Management has warned that Q1 margins will be pressured by tariff headwinds; sellside consensus is at a 20.5% core EBIT margin. Alcon is scheduled to report on 6 May.
UBS described consensus expectations for Biomerieux as modest - group organic growth of about 0.6% for Q1 - and said this reflects a difficult comparison against a strong prior flu season rather than evidence of structural weakness at the company. UBS noted the stock trades at a roughly 30% discount to its historical average 12-month forward P/E, compared with an EU MedTech sector average of 25%. Biomerieux will report Q1 revenues on 23 April.
Fresenius SE is expected to report on 6 May. UBS models Q1 organic revenue growth of 5%, which it characterises as toward the low end of the company’s 4-7% constant currency guidance. The brokerage expects Core EPS growth to be around the midpoint of the full-year guidance of 5-10%. UBS also flagged investor concerns about energy costs and reimbursement pressures at Helios Germany as items market participants will watch closely.
UBS outlined several companies where the setup is more balanced.
- Philips - UBS expects the company to beat a lowered consensus when it reports on 6 May, though it noted buy-side expectations for margins sit marginally above sellside levels.
- Elekta - UBS anticipates a robust order quarter ahead of the 28 May Q4 report, with buy-side order intake forecasts at high single-digit growth versus UBS's low double-digit expectation after converting U.S. Versa orders.
- Fresenius Medical - UBS models adjusted EBIT of approximately 20 million for the firm 2; it expects a beat of sellside EBIT consensus but said the beat is driven by one-off TDAPA-related tailwinds, including 250 million from phosphate binders and 70 million from DefenCath. UBS models U.S. same-store treatment volumes as flat. Fresenius Medical reports on 5 May.
UBS described sentiment around Smith & Nephew as "arguably the most clearly negative in the sector." The company is due to report Q1 sales on 6 May. UBS cautioned that any miss against the 3.5-4% organic growth expectation would be difficult to reconcile with the step-up in performance required to hit full-year guidance of roughly 6%.
Across the names discussed, UBS's note underlines a mix of company-specific dynamics - tariff and energy headwinds, product competition, and regional market challenges - that are likely to shape investor reactions through the late-April to late-May reporting window.