UBS analysts are ‘Overweight’ the healthcare equipment sector, with a Number One ranking on their total scorecard.
In a note to clients on Tuesday, the analysts wrote that healthcare equipment has had the highest growth rate historically, excluding technology, at a 9% compound annual growth rate (CAGR) and the sector’s earnings per share are now trading 10% below trend.
They also believe the sector appears “safer” than Big Pharma, due to factors such as less tariff risk.
The analysts favor Abbott Laboratories (NYSE:ABT) and Boston Scientific Corp (NYSE:BSX, ETR:BSX) in US, noting that Boston Scientific offers the best value.
They also like the benchmark pharma space, pointing to “unusually” supportive factors such as earnings momentum that has been much better than performance as well as the sector’s historic outperformance in a rising credit spread environment.
Generative AI could also help reduce the cost of production and increase the speed of developing new products, the analysts noted.
UBS has ‘Buy’ ratings on Johnson & Johnson (NYSE:JNJ) and Abbott Laboratories.