GE Healthcare's quiet outperformance is becoming increasingly difficult to overlook, with the company's new drug used in radiology to improve the diagnosis of heart disease likely to drive the club's stock price even higher. Could be helpful. Wells Fargo analysts said in a note to clients on Sunday that GE Healthcare's diagnostic Fricad is “perhaps the most undervalued asset” held by the large medical technology company. Flyrcado was approved by the Food and Drug Administration late Friday for the detection of coronary artery disease and is expected to launch in some U.S. markets in early 2025 before expanding availability. Wells Fargo said Flyrcado's annual sales could peak at least $1 billion, boosting earnings by about 80 cents a share by 2028. Wall Street now expects GE Healthcare to earn $6.72 a share in 2028, up from this year's forecast of $4.25, according to FactSet. . “It's incredible,” Jim Cramer said Monday of Wells Fargo's optimism for Flyrcado. GE Healthcare is a stock we've been fighting against ever since it crashed in the second quarter. The FDA approval and the impending launch of Flyrcado brightens the outlook for GE Healthcare's diagnostics business, which is part of the company's investment thesis that has not been top of mind for investors lately. Rather, the market seems to be focused on GE Healthcare's ability to benefit from lower interest rates from the Federal Reserve. This lowers borrowing costs and makes it easier for hospitals and other medical facilities to finance expensive MRI and CT machines. This dynamic, combined with positive Chinese economic stimulus announcements in recent days, made GE Healthcare one of our best-performing stocks in the third quarter. The stock rose another 1% on Monday, bringing its July-September gain to more than 19%. By comparison, the S&P 500 healthcare sector and the broader market index as a whole rose about 5%. . After Friday's all-time high, we trimmed our position in GE Healthcare and worked hard to take profits in this often underperforming stock. Still, business fundamentals are looking increasingly attractive, and Friday's retail amid an overbought market did not express our confidence, according to the S&P Short Range Oscillator. That's what it means. “The equipment here is so expensive that we didn't think we would need to finance it, and we should have. So if interest rates come down, we can recoup it,” Jim acknowledged on Monday. Ta. “In addition to that, we now have the reason we felt it was important: diagnosis.”As of the start of May 2023, the most attractive diagnostics will be for the detection of Alzheimer's disease. It appeared to be Vizamyl used. Visamil's momentum in recent quarters should continue as the club's holdings of early-stage Alzheimer's disease drugs Biogen and Eisai's Rekenbi and Eli Lilly's Kisunra become more prevalent. It's clear that Flyrcado also deserves attention. Flyrcado is a so-called radioactive tracer. It is given to patients by intravenous injection before they undergo a positron emission tomography test, known simply as a PET scan. According to the CDC, Flyrcado shows how blood flows through the heart muscle of patients who have or are suspected of having coronary artery disease, the most common type of heart disease in the United States. The main imaging technique currently used to diagnose coronary artery disease is single photon emission computed tomography, commonly abbreviated as SPECT. SPECT scans and PET scans are both part of the field of nuclear medicine, but they use different types of radioactive tracers to aid in the diagnostic process. According to GE Healthcare, PET scans using Flyrcado have better diagnostic efficacy than SPECT scans. This makes Flyrcado a better option for “hard-to-image patients, such as those with high body mass index (BMI) and women,” Wells Fargo analysts wrote. With a half-life of 109 minutes, Flyrcado can also be manufactured in off-site pharmacies and delivered to hospitals and imaging centers. The company says this is one of its advantages over existing radioactive tracers used in scans to detect heart disease. “With 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 catalyst for GEHC and the absence of (Flycad's) contribution to today's consensus numbers could be a positive growth-promoting addition to GEHC's 2025 outlook.” high,” the analysts said in a letter to clients on Sunday. Stifel raised GEHC's price target to $102 per share from $100. Proposed changes to how Medicare pays for diagnostics like Flyrcado going into effect next year could boost the overall diagnostics business. GE Healthcare may also see a recovery in its China business due to the rollout of a medical-focused economic stimulus package. Management is expected to discuss both of these additional factors in further detail at an investor day set for November 21st. We just reduced our GEHC position, giving us a 2 rating on our stock. In other words, we are waiting for a rebound before considering buying more. . We are revising our $92 price target as the stock is currently trading above that level. (Jim Cramer's charitable trust is long GEHC. See here for a complete list of stocks.) As a subscriber to Jim Cramer's CNBC Investment Club, you receive trade alerts before Jim makes a trade. I will receive it. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in the charitable trust's portfolio. 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GE Healthcare's booth is seen ahead of the 2022 China International Trade Fair in Services (CIFTIS) to be held at the China National Convention Center in Beijing, China on August 28, 2022.
Yi Haifei | China News Service | Getty Images
GE Healthcare's quiet outperformance is becoming hard to miss. And that new drug, used in radiology to improve the diagnosis of heart disease, could help the club's stock make even more noise.
