RBC Capital Markets has initiated coverage of GE HealthCare Technologies with an Outperform rating and a price target of $80, identifying the medical technology company's expanding lineup of AI-enabled imaging, diagnostics and healthcare software as catalysts for faster revenue and earnings growth over the coming years.
The brokerage points to a step-up in research and development spending following GE HealthCare's 2023 separation from General Electric, saying that increased investment is now translating into stronger order flow and a record backlog of $22 billion. RBC notes that this backlog is roughly equivalent to GE HealthCare's expected revenue for 2026, and interprets the combination of elevated investment and the backlog as evidence that growth should accelerate beginning in late 2026 and continuing into 2027.
Product pipeline and revenue contribution
RBC highlighted a slate of new products across imaging, diagnostics and software. The brokerage listed the Photonova Spectra photon-counting CT scanner, the Omni Total Body PET/CT system, the Flyrcado cardiac PET imaging agent, the Vivid Pioneer ultrasound platform and the CareIntellect clinical software suite. Based on these launches, RBC estimates that new products could add between 100 and 200 basis points of revenue growth in the 2026 to 2028 window.
Medium-term growth expectations
On a medium-term basis, RBC expects GE HealthCare to achieve organic revenue growth in the range of 4% to 6%, with earnings expanding in the high-single-digit to low-double-digit range. The firm attributes this projection to wider adoption of AI-enabled offerings, conversion of the sizable backlog into booked revenue and the prospect of a recovery in the Chinese market.
RBC also flagged upside risk to current consensus earnings estimates. Management guidance, the brokerage said, assumes that inflationary pressures remain elevated through 2026. Should tariffs be refunded or cost inflation prove lower-than-expected, those developments could act as an earnings tailwind.
Recurring revenue and valuation
The brokerage drew attention to GE HealthCare's growing recurring revenue mix driven by services, software subscriptions and pharmaceutical diagnostics. GE HealthCare has a stated target to increase long-term recurring revenue to 60% of sales from approximately 50% today, a shift RBC views as supportive of margin stability and predictability.
RBC's model forecasts adjusted earnings per share of $4.91 in 2026 and $5.45 in 2027, modestly ahead of Wall Street expectations. The firm noted that the stock trades at about 11 times projected 2027 earnings and suggested that the valuation may not fully capture the company's potential growth trajectory.
Market performance and potential upside
Shares of GE HealthCare have declined about 26% year-to-date. RBC argued that accelerating innovation, margin improvement and continued capital returns, including share repurchases, could support roughly 30% upside to its $80 price target.
Bottom line
RBC's initiation frames GE HealthCare as a company transitioning from post-separation investment to commercialization, with AI-enabled products, a large backlog and a strategic push toward recurring revenue central to its thesis for faster growth beginning in late 2026.