GE Healthcare's quiet outperformance is becoming harder to ignore, and its new drug used in radiology to improve the diagnosis of heart disease may help the club's stock make a little more noise. In a note to clients on Sunday, Wells Fargo analysts said Flyrcado, GE Healthcare's diagnostic agent, is “arguably the most underrated asset” owned by large medical technology companies. Flyrcado, approved by the Food and Drug Administration late Friday for screening for coronary artery disease, will launch in some U.S. markets in early 2025 before availability expands. Wells Fargo said Flyrcado has peak annual sales potential of at least $1 billion and could grow earnings per share by about 80 cents by 2028. Wall Street currently projects GE Healthcare will earn $6.72 per share in 2028, according to FactSet, compared to the $4.25 projected for this year. . “That's incredible,” Jim Cramer said Monday of Wells Fargo's optimism about Flyrcado. GE Healthcare has been a stock we have been struggling with since its sharp decline during the second quarter. The FDA approval and impending launch of Flyrcado brighten the outlook for GE Healthcare's diagnostics business, a part of our investment thesis that has not been a priority for investors lately. Instead, the market has apparently focused on GE Healthcare's ability to benefit from the Federal Reserve's interest rate cuts, which reduce borrowing costs and make it easier for hospitals and other medical facilities to finance purchases of their expensive MRI and CT machines. That dynamic, along with China's positive stimulus announcements in recent days, made GE Healthcare one of our best-performing stocks in the third quarter. Shares rose more than 1% on Monday, lifting gains in the July-September period to more than 19%, compared with gains of about 5% for both the S&P 500's healthcare sector and the broader index. of the market. . After hitting a new all-time high on Friday, we trimmed our position in GE Healthcare, locking in hard-fought gains in a stock prone to periods of underperformance. Still, the fundamentals of the business look increasingly attractive, and Friday's small selling in a series of overbought market days, according to the S&P Short Range Oscillator, was not a statement about our conviction. “I hadn't thought, and I should have, that the equipment here is so expensive that you need to finance it. So once the rates came down, you could recoup the investment,” Jim acknowledged Monday. “On top of that, we now understand the reasons why I felt it was important: the diagnosis.” At the time of our start in May 2023, the most interesting diagnostic seemed to be Vizamyl, which is used in the detection of Alzheimer's disease. Vizamyl's momentum in recent quarters should continue as the nascent class of Alzheimer's treatments (Biogen and Eisai's Leqembi and Eli Lilly's Club with Kisunla) see greater uptake. It is clear that Flyrcado also deserves attention. Flyrcado is what is known as a radiotracer. It is given to patients by intravenous injection before they undergo a positron emission tomography scan, known simply as a PET scan. Flyrcado shows how blood flows through the heart muscle in patients with known or suspected coronary artery disease, the most common type of heart disease in the US, according to the CDC. The main imaging technique currently used to diagnose coronary artery disease is single-photon emission computed tomography, commonly abbreviated as SPECT. Both SPECT and PET are part of the field of nuclear medicine, but they use different types of radiotracers to aid in the diagnostic process. A Flyrcado PET scan has better diagnostic efficacy than SPECT scans, according to GE Healthcare. That makes Flyrcado a better option for “difficult-to-image patients, such as those with a high body mass index (BMI) and women,” Wells Fargo analysts wrote. Due to its half-life of 109 minutes, Flyrcado can also be produced in an outside pharmacy and then shipped to hospitals and imaging centers. According to the company, that is one of its advantages over existing radiotracers used in scans to detect heart disease. “Because of these advantages, we expect Flyrcado to cannibalize current PET tracers over time,” Wells Fargo said. Stifel analysts are also optimistic about Flyrcado's potential. The approval of the radiotracer is a “clear positive incremental catalyst for GEHC, and without [Flyrcado] contribution to today's consensus numbers, this appears likely to be a positive, growth-enhancing increase for GEHC's outlook for 2025,” the analysts wrote to clients on Sunday. Stifel raised its GEHC price target to $102 per share from $100. Looking ahead to next year, a proposed change to the way Medicare pays for diagnostic agents like Flyrcado could take effect, boosting its overall diagnostics business. GE Healthcare could also see a recovery in its overall diagnostics business. business in China due to the launch of medical-focused products. The stimulus spending administration is expected to talk more about these two additional factors at its investor day scheduled for November 21. After trimming our position in GEHC, we have. a 2 rating for the stock, meaning we're expecting a pullback sooner considering buying more. We're revising our price target of $92, as the stock is now trading above that level (Jim Cramer's Charitable Trust has a rating of 2). long position in GEHC. See here for a full list of actions). Investment Club with Jim Cramer, you will receive a trade alert before Jim makes a transaction. 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The GE Healthcare booth is seen before the 2022 China International Fair for Trade in Services (CIFTIS) at the China National Convention Center on August 28, 2022 in Beijing, China.
Yi Haifei | China News Service | fake images
GE healthcareIt's increasingly difficult to ignore the company's quiet outperformance, and its new drug used in radiology to improve the diagnosis of heart disease may help the club's stock make a little more noise.
