UBS Names Top European MedTech Picks Ahead of Q2 Earnings

Analysts at UBS have highlighted Ambu, Coloplast, and Ottobock as standout investment opportunities in the European medical technology sector ahead of the upcoming earnings season. The bank maintained "Buy" ratings on all three companies, citing a positive risk-to-reward setup despite broadly cautious sentiment across the space.

Sector Nears a Trough

According to the UBS report, the second quarter is expected to represent a low point for the MedTech sector's performance. This environment of low expectations could create a favorable backdrop for companies that manage to meet or exceed their financial targets.

Negative sentiment has been a persistent theme, meaning that a solid delivery from these select names could be sufficient to trigger a gradual improvement in investor positioning and potentially lead to a share price re-rating.

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Key Stocks to Watch

UBS outlined specific performance indicators that will be critical for each company in the upcoming reports:

• Ambu: Consensus models forecast 10% organic revenue growth. Investors will be watching for an acceleration in the Respiratory segment, steady growth of 16-18% in the URO, ENT, and GI businesses, and a recovery in Aesthetics & Pain Management. Management's full-year guidance is for 10-12% organic growth.
• Coloplast: The market expects 5.7% organic growth. A key focus will be on the Chronic Care division, where growth of 6-7% would help ease fears of structural market pressure. Investors are also looking for signs that its Kerecis business has bottomed out and for the initial strategic perspective from new CEO Gavin Wood, who will have been in the role for about 100 days.
• Ottobock: After a sluggish first quarter, the market anticipates an acceleration in organic growth toward the midpoint of the 5-8% full-year guidance. A significant recovery in the Americas, which contracted by 1.4% in Q1, is seen as a crucial component for a positive market reception.