Goldman Sachs analysts, including Richard Felton and David Roman, are signaling a constructive outlook for the medical care technology sector as hospital networks shift capital toward revenue-generating equipment. The firm expects the industry to enter a period of robust capital expenditure that could affect near-term earnings reports.
Sector backdrop
According to the analysts, high-end imaging systems appear relatively insulated from broader macroeconomic pressures and cuts to infrastructure spending. That relative resilience, combined with increased hospital tender activity in some regions, underpins Goldman Sachs' preference for select names as companies report first-quarter results.
Philips: European tender activity fuels momentum
Goldman Sachs has singled out Philips as its top European pick. The bank's proprietary tracker shows a 310% year-over-year increase in European tenders for MRI and CT systems in the first quarter. Within that data, Philips' tender values rose sharply to 86 million euros from 6 million euros in the prior-year period, driving the company's market share to its highest level in more than a decade.
The analysts see this uptick in procurement as a potential source of material growth and margin expansion through 2026. Goldman also notes that more active capital allocation at Philips and an expected return to the U.S. sleep apnea market are contributors to the firm's positive outlook.
GE HealthCare: U.S. exposure centered on a product cycle inflection
For U.S. exposure to the medtech sector, Goldman favors GE HealthCare. The bank describes the company as approaching a product cycle inflection point, with a new suite of technologies anticipated to accelerate growth. That pipeline of new offerings is viewed as a stabilizing force amid regional headwinds, including softening bidding data in China and geopolitical uncertainty in the Middle East.
Goldman notes hospital administrators are exhibiting greater selectivity when allocating budgets. Nevertheless, due diligence indicates that essential imaging and robotic platforms continue to be prioritized. With U.S. hospital budgets reportedly holding steady for mission-critical systems, GE HealthCare is portrayed as well positioned to benefit from a replacement cycle that favors higher-efficiency, AI-integrated diagnostic solutions.
What to watch
Investors following first-quarter results should monitor tender activity levels, regional bidding trends, and any information companies provide on capital allocation and product launch timing. Goldman Sachs' preferences reflect a focus on firms that are best placed to capture upgraded hospital spending on revenue-generating technologies.