Aging Populations, Digital Health And Emerging Markets Will Spur Lifesaving Demand

Key Takeaways

• Faster-than-expected scaling of new assets and recurring, high-margin products could significantly drive profitability above analyst expectations.
  
• Market exits by competitors, innovation, and emerging market investments position the company for outsized growth and a strong competitive advantage.
  
• Rising tariffs, regulatory costs, digital disruption, and demographic challenges threaten profitability, growth, and the sustainability of core revenue streams in traditional medical device markets.

Catalysts

Provides products and solutions for operating rooms, intensive-care units, and sterilization departments in Sweden and internationally.

• While analyst consensus sees Paragonix and KidneyVault as strong growth drivers, recent results suggest these assets are scaling faster than expected, already accretive to group margins and potentially front-loading upside to both revenue and net margins well ahead of 2028, which could drive a step-change in overall group profitability.
  
• Analysts broadly agree that increasing high-margin product mix and growing recurring revenues will gradually boost margins, but the current run-rate-with recurring revenues already comprising 65% of sales and high-margin products now two-thirds of the total-suggests Getinge could materially outperform consensus margin expansion estimates as positive operational leverage and sales mix shifts accelerate earnings.
  
• Market dynamics in ventilators and critical care are creating a multi-year replacement tailwind due to competitors exiting the market; Getinge's leading position and product innovation stand to disproportionately benefit from the high and rising prevalence of acute and chronic respiratory disease, underpinning stronger long-term revenue growth.
  
• Surging healthcare investments in emerging markets, coupled with Getinge's expanding geographic reach and regulatory progress, position the company to capture an outsized share of new addressable markets-fueling sustained double-digit organic growth as emerging market demand for high-quality critical care and infection control solutions expands.
  
• Getinge's investment in digital health, automation, and data-driven workflow solutions is set to create high-margin software and service-based recurring revenue streams, compounding earnings growth and establishing a competitive moat as global hospitals demand more integrated, efficiency-boosting technologies.

Getinge Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Getinge compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Getinge's revenue will grow by 6.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 4.2% today to 11.1% in 3 years time.
• The bullish analysts expect earnings to reach SEK 4.7 billion (and earnings per share of SEK 17.33) by about July 2028, up from SEK 1.5 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.6x on those 2028 earnings, down from 35.4x today. This future PE is lower than the current PE for the GB Medical Equipment industry at 45.5x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.02%, as per the Simply Wall St company report.

Getinge Future Earnings Per Share Growth

Risks

• Continued and potentially escalating tariffs, especially between the EU, US, and China, could structurally increase operational costs and compress operating margins, as the company has already absorbed SEK 110 million in tariff expenses in a single quarter and cannot fully pass these onto customers due to price competition and long-term contracts.
  
• Getinge's core business is heavily weighted toward traditional medical devices and capital equipment such as ventilators and sterilization systems, leaving it vulnerable to industry disruption from accelerated digital transformation in healthcare, which risks eroding long-term organic revenue growth and market share.
  
• Increasing quality and regulatory compliance costs remain an ongoing issue, as seen in the need for continuous field actions, audit findings, and product uplift work, and any renewed quality lapses or further regulatory tightening could result in margin-eroding recalls, litigation, or delays in bringing new products to market, directly impacting net margins and earnings.
  
• The company's slower growth in installed base and hardware sales for critical categories like balloon pumps and ECMO, mainly due to marketing restrictions and regulatory hurdles, indicate that segments vital for recurring consumable revenue are under structural pressure, risking stagnation or decline in associated revenues.
  
• Global demographic trends, with slowing population growth and declining birth rates in mature healthcare markets, threaten to dampen the long-term demand for capital-intensive hospital equipment, putting pressure on Getinge's ability to achieve robust top-line expansion over the next decade.

Valuation

• The assumed bullish price target for Getinge is SEK300.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Getinge's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK300.0, and the most bearish reporting a price target of just SEK165.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be SEK42.7 billion, earnings will come to SEK4.7 billion, and it would be trading on a PE ratio of 20.6x, assuming you use a discount rate of 6.0%.
  
• Given the current share price of SEK193.8, the bullish analyst price target of SEK300.0 is 35.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.