Overview#
J.P. Morgan has identified Fresenius SE as its top pick in the European medical technology sector. This comes after a recent selloff in the sector, which has led to stock valuations dropping to levels not seen since the recovery following the global financial crisis.
Current Valuation#
Fresenius SE, listed in Frankfurt, is currently trading at €46.49. J.P. Morgan believes the fair value of the stock could be in the mid to high €50s over the next year, suggesting a potential increase of 15-25%. The analysts base this valuation on expected core earnings per share of €3.11 for 2026 and €3.32 for 2027, using price-to-earnings ratios between 15 and 18.
Key Growth Drivers#
The brokerage points out that the recent decline in Fresenius’s share price is due to market adjustments rather than any negative changes in the company’s fundamentals. J.P. Morgan anticipates continued growth in Fresenius’s Kabi division, which focuses on nutrition and pharmaceuticals. They expect Kabi's revenue growth to be in the high single digits in early 2026, surpassing the general market expectation of around 6.5%.
Broader Market Context#
The analysis also highlights that the overall European healthcare equipment and services sector is currently trading at a price-to-earnings ratio of 19.1, which is 7% lower than its historical average of 20.5. This suggests that the sector is undervalued compared to its long-term performance. Fresenius SE has experienced a smaller decline of 5.1% year-to-date, especially when compared to peers like Gerresheimer and Carl Zeiss Meditec, which have seen larger drops of 34.5% and 41%, respectively.
J.P. Morgan maintains an “overweight” rating on Fresenius SE, while its separate entity, Fresenius Medical Care, is rated “underweight.”