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GE Healthcare Faces Earnings Hit from New Tariffs

GE HealthCare shares plummeted as new tariffs raise EPS impacts. Investors must consider how ongoing U.S.-China trade dynamics will affect performance and growth.

Date: 
AI Rating:   4

Impact of New Tariffs on GE HealthCare

GE HealthCare Technologies (NASDAQ: GEHC) experienced a significant decline in its stock price of 12.9% in April, primarily driven by the new tariffs imposed by President Trump. These tariffs are expected to adversely affect the company's earnings per share (EPS), increasing the anticipated negative impact from $0.05 to $0.80 per share for 2025. Consequently, the revised total EPS impact stands at $0.85.

Additionally, management has adjusted its earnings expectations downward, changing the EPS Guidance from a range of $4.61-$4.75 to $3.90-$4.10 for the full year. Such a reduction clearly signals a more challenging financial outlook, which may weigh on investor sentiment and stock performance.

Revenue Growth Forecast

Despite these headwinds, GE HealthCare still anticipates organic revenue growth in the range of 2%-3%. This guidance reflects stabilization in its core markets, although it is notably lower than before due to pressures from new tariffs and diminished demand from key markets like China.

Free Cash Flow Concerns

The adjustments extend to free cash flow expectations, with management lowering their guidance from at least $1.75 billion to a minimum of $1.2 billion. Such a substantial drop in free cash flow raises concerns about the company’s financial flexibility and ability to reinvest in its growth initiatives.

By anticipating a mid-single-digit decline in revenue stemming from China in the first half of the year, along with expectations of an improving condition in the second half, investors should remain vigilant about the broader implications of U.S./China trade relations on GE HealthCare's competitiveness and growth trajectory. Such uncertainties highlight the risks that the company faces from geopolitical tensions and the evolving healthcare market landscape.

Stocks:  GEHC