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Investing.com -- The European medical technology sector is heading into 2026 with subdued expectations across J.P. Morgan’s 20-stock coverage universe after underperforming broader markets for the fourth time in five years, according to a recent note.
The sector delivered 4% returns year-to-date versus 14% for the Stoxx 600 index, weighed down by challenges including difficulties in China, slower elective procedure markets, tariff impacts and US dollar weakness.
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Analysts project another year of second-half weighting as companies navigate foreign exchange headwinds and tariff annualization.
Fresenius SE remains J.P. Morgan’s top pick with an "overweight" rating despite 43% year-to-date performance.
The company trades on FY26E price-to-earnings ratio of 12.6x and EV/EBITDA of 10x, which analysts view as undervalued relative to double-digit earnings per share growth prospects.
Tangible evidence of turnaround at the Kabi division resulted in an upgrade to the structural margin band during 2025.
Gerresheimer carries an "overweight" rating despite shares falling 63% year-to-date. The company trades at FY26E price-to-earnings ratio of 8.5x and FY26 EV/EBITDA of 6.6x.
Analysts believe double-digit revenue growth and mid-teens adjusted EBITDA growth deserves a significantly higher multiple, with a planned moulded glass divestment expected to improve business quality.
Convatec maintains an "overweight" rating after de-rating approximately 20% since July. Management has outlined a path to around 100 basis points of margin expansion and double-digit earnings per share growth in FY26.
The stock trades on 15.2x FY26 price-to-earnings ratio versus Coloplast at 22.7x.
Smith & Nephew earned an "overweight" rating with shares up 25% year-to-date. The upcoming Capital Markets Day will be critical in setting expectations.
Analysts believe consensus looks appropriate for revenues but see upside to margins over the likely three-year guidance period, expecting guidance in the 21-22% range.
Demant receives an "overweight" rating with analysts viewing FY25 guidance as tight but seeing an improved setup into FY26 at 16x FY26 price-to-earnings ratio.
The brokerage projects better hearing aid market growth in FY26 given relatively easy comparisons, with a likely new platform launch potentially proving timely.
Straumann was upgraded from "neutral" to "overweight," trading at 26.5x FY26E price-to-earnings ratio. The recent Capital Markets Day reaffirmed the outlook for double-digit top-line growth through 2030.
Early green shoots of US market recovery could gather pace in 2026, while in China, restocking and pent-up demand could support growth despite VBP 2 price cuts of approximately 10%.
Siemens Healthineers maintains an "overweight" rating with current FY26 price-to-earnings ratio of 18x, declining to 15.9x in FY27.
Organic order growth trends in recent quarters have been resilient and point to persistent share gains. The company expects China to remain flat year-over-year in FY26.
Alcon carries a "neutral" rating with FY26 price-to-earnings ratio of 23.4x. Analysts see scope for continued mid-to-high single-digit revenue growth, although margin expansion is likely less than 100 basis points given foreign exchange and tariff headwinds. FY25 guidance assumes $100 million in tariff costs.
GN Store Nord receives a "neutral" rating with shares trading on 12.6x FY26 price-to-earnings ratio. Management expects the Audio market to return to growth sometime in 2026. Hearing momentum has remained strong into the third year, while cost savings under the OneGN structure could present upside surprises to margins.
Ambu holds a "neutral" rating at 34.9x FY26 price-to-earnings ratio. Analysts expect strong top-line performance driven by continued double-digit growth in endoscopy at 15% in FY26e, following FY23 15%, FY24 20% and FY25 15.4%.
However, margin progression is likely slower than expected due to increased operating expense investments.
Coloplast, Amplifon, and bioMerieux all carry "neutral" ratings.
Philips, Sonova, Diasorin, Getinge, Carl Zeiss, Fresenius Medical Care, and Elekta all carry "underweight" ratings, with analysts citing various concerns including limited visibility, challenging market conditions, and downside risks to forecasts.
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