Deutsche Bank reported that the second-quarter reporting season across European MedTech and Life Sciences delivered a greater number of earnings beats than misses, while noting that some of the upside reflected non-operational benefits such as tariff refunds.
The bank said full-year consensus earnings revisions for 2027 remain negative in both sectors, although the magnitude of those downward adjustments has diminished. That improvement in momentum, together with greater investor positioning and a stabilization of 2026 consensus earnings estimates, helped a modest re-rating in both sectors.
Valuations, however, still sit at the low end of historical ranges, Deutsche Bank cautioned. Management at the bank said that for a more significant re-rating to take hold, a sustained upward trajectory in consensus earnings will be required.
Looking ahead to the coming quarter, the bank expressed uncertainty about whether a sustained recovery in earnings estimates will materialize. It flagged the ongoing Middle Eastern conflict as a potential source of higher inflation, which the bank said would likely weigh on both MedTech and Life Sciences companies. As a result of these macro risks, the bank maintains a cautious overall view, with particular reservation on MedTech.
Following the reporting season, Deutsche Bank identified three names it prefers within the coverage universe: Fresenius SE, Lonza and Ottobock. Each was highlighted for specific operational features and relative valuation.
On Fresenius SE, Deutsche Bank pointed to continued positive operational momentum across the Helios and Kabi divisions. The bank noted that the German healthcare reform should not act as a material headwind, citing management guidance that Helios EBIT is still expected to grow in 2027 despite the reform's implementation. Fresenius shares trade at around 12 times Deutsche Bank's 2027 price-to-earnings estimate.
Lonza was described as well positioned to sustain strong operational performance into 2026 and 2027, building on an expected double-digit top- and bottom-line expansion this year. Deutsche Bank said Lonza benefits from robust end markets that are largely insulated from geopolitical headwinds and tariffs. The stock is valued at roughly 27 times the bank's 2027 earnings estimate.
For Ottobock, Deutsche Bank observed a clear acceleration in second-quarter results following a softer first quarter. The bank expects continued strong growth and an improving margin profile in upcoming quarters. Ottobock trades at about 16 times Deutsche Bank's 2027 price-to-earnings estimate.
Overall, Deutsche Bank's read of the reporting season is one of stabilization rather than clear recovery: Q2 delivered more positives than negatives, but earnings revisions for the medium term remain under pressure and macro uncertainty could hamper momentum going into the third quarter.