KeyBanc Capital Markets upgraded Solvay (NYSE:SOLV) to Overweight from Sector Weight in its 2026 Medical Technology outlook, according to analyst Brett Fishbin. The firm framed the move within a broader shift in how investors should approach the medical technology sector, favoring individual stock selection now that the groupwide valuation edge has largely evaporated.
KeyBanc noted that the S&P 1500 Equipment and Supplies Index trades at about a 2% premium to the S&P 500 on a next-twelve-months price-to-earnings basis. That gap compares with a roughly 25% premium that the sector carried on average over the past five years, the research note said.
The firm said its confidence in the sustainability of positive MedTech trends into 2026 has increased. It pointed to encouraging fourth-quarter signals, referencing favorable preannouncements and positive commentary from early industry bellwethers Johnson & Johnson (NYSE:JNJ) and Abbott Laboratories (NYSE:ABT). KeyBanc's proprietary data also indicated that hospital procedure volumes improved in the second half of 2025, showing growth in the mid-single-digit to high-single-digit range.
On capital markets activity, KeyBanc highlighted that 2025 saw more M&A in medical technology than the prior three years both by deal value and number of transactions. The bank observed that 2026 opened with Boston Scientific's $15 billion purchase of Penumbra (NYSE:PEN), which it said points to a continuing active backdrop for potential additional deal flow.
Alongside the Solvay upgrade, KeyBanc listed a set of names it views as top investment ideas for 2026. Those include LivaNova (NASDAQ:LIVN), ICU Medical (NASDAQ:ICUI), and STERIS (NYSE:STE). The note pointed out that several of these companies outperformed the broader medical technology sector during 2025.
Corporate leadership update
Separately, UFP Technologies disclosed a planned leadership transition. CEO R. Jeffrey Bailly will retire at the company’s annual meeting on June 4, 2026, concluding a 31-year tenure leading the business. Mitchell Rock, who currently serves as President, will succeed Bailly as CEO and will join the board of directors. To facilitate continuity, Bailly will remain involved as Executive Chairman for one year after his retirement.
Implications and context
KeyBanc’s note frames the current environment as one where sector-level valuation cushions have diminished, which it says elevates the importance of individual stock selection. The firm points to improving demand metrics and elevated M&A activity as the pillars of its constructive stance on select MedTech names heading into 2026.