Deutsche Bank sees stabilization in European MedTech and Life Sciences

Investing.com -- Deutsche Bank said Wednesday that the second quarter reporting season for European MedTech and Life Sciences sectors showed more earnings beats than misses, though results were partly helped by non-operational items such as tariff refunds.

Full-year consensus earnings revisions for 2027 remained negative across both sectors, but the size of these cuts appears to be decreasing, the bank said. Both sectors saw a slight re-rating, supported by increased investor positioning and a stabilization of 2026 consensus earnings estimates.

The bank said valuation levels remain at the low end of their historical ranges. A sustained upward trend in consensus earnings will be necessary for a further re-rating, it added.

Deutsche Bank said it is uncertain if this will materialize as the third quarter approaches, noting that the ongoing Middle Eastern conflict could increase inflation, which would likely weigh on both sectors. The bank maintains a cautious view, particularly on MedTech.

Following the reporting season, Deutsche Bank named Fresenius SE, Lonza, and Ottobock as its top picks.

The bank said operational momentum remains positive at Fresenius SE across both the Helios and Kabi segments. The German healthcare reform should not be a significant headwind, as management now expects EBIT at Helios to grow in 2027 despite its implementation. The shares trade at only 12 times the bank's 2027 price-to-earnings estimate.

Lonza is well-positioned to continue strong operational performance in 2026 and into 2027, building on expected double-digit top and bottom-line growth this year. The company benefits from robust end markets that are largely insulated from geopolitical headwinds and tariffs. The shares trade at only 27 times the bank's 2027 price-to-earnings estimate.

Ottobock's second quarter results showed clear acceleration from a softer first quarter, and the bank expects strong growth and improving margin profile to continue in coming quarters. The shares trade at just 16 times the bank's 2027 price-to-earnings estimate.

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