Morgan Stanley analyst Patrick Wood initiated coverage on GE HealthCare Technologies Inc (NASDAQ:GEHC) with an Equal-Weight rating and a price target of $76.

The analyst said the company's peers had seen a strong trend almost across the board in Q1, with Abbott Laboratories (NYSE:ABT) customers having managed to work through staffing shortages, Koninklijke Philips N.V. (NYSE:PHG), Siemens Healthineers AG (OTC:SMMNY), and Intuitive Surgical Inc (NASDAQ:ISRG) all beating in Q1 and GEHC itself hitting +12% organic sales growth.

The analyst sees an important shift in the CT technology landscape towards photon counting, largely due to superior output. In the mid-term, photon counting could add 350 basis points to price/mix in the CT margin and potentially a positive surprise for GEHC.

A key part of the GEHC investment case is moving to high-teens adjusted EBIT margins which the analyst thinks makes sense.

The challenge for GEHC's stock is that Street mid-term numbers reflect much of the margin improvement program and already look reasonable, said the analyst.

Overall, the analyst thinks demand is looking solid for GEHC, and margin targets are sensible, with new photon counting work suggesting solid mid-term opportunity.

Price Action: GEHC shares are trading lower by 0.69% at $77.27 on the last check Tuesday.