Investing.com -- HSBC has reshuffled its ratings across the MedTech and Life Sciences sector, upgrading Siemens Healthineers AG (ETR:SHLG) and Sonova (SIX:SOON) to Buy while cutting Align Technology (NASDAQ:ALGN), Eurofins Scientific SE (EPA:EUFI), IQVIA, and Smith & Nephew (LON:SN) to Hold.
The revision comes as investors debate whether the recent correction in the sector presents a buy opportunity, or marks the start of a possible recession.
“To make the matters worse, there are few frameworks to assess the degree of multiples compression that long-duration growth names might face if the weak macro environment deteriorates by tariff-led inflation or stagflation,” analysts led by Rajesh Kumar said in a note.
HSBC downgraded Align Technology amid a "weak consumer sentiment in the U.S. resulting in volume declines, combined with average selling price (ASP) cuts."
Similarly, IQVIA was cut to Hold due to concerns around project cancellations and macro uncertainty.
“The current uncertain macro environment poses the risk of a slowdown in expected recovery in the short-cycle TAS business, and we think investors need higher returns for a financially levered business such as IQVIA,” the analysts said.
The bank also pulled back on Eurofins, highlighting "macro volatility" and soft biopharma trends, and Smith & Nephew, where newly imposed tariffs on Malaysian imports are expected to complicate its orthopedic recovery in the U.S.
On the other hand, Siemens (ETR:SIEGn) Healthineers was upgraded to Buy, supported by "potential competitive gain over GE Healthcare" and confidence in its cancer care and diagnostic imaging business.
Sonova was also lifted to Buy, with analysts stating that "the concerns about U.S. tariffs on hearing aid names might be overdone given that hearing aid products come under the Nairobi protocol."
In addition to the rating changes, HSBC highlighted five stocks as key ideas based on favorable risk/reward: Lonza Group AG (SIX:LONN), Thermo Fisher (NYSE:TMO), Coloplast (CSE:COLOb), Biomerieux SA (EPA:BIOX), and Stedim (EPA:STDM). All five are seen as relatively well-positioned across a range of economic scenarios, including stagflation and recovery.
The overarching message from the bank is that, despite near-term macro challenges and tariff concerns, selected names with structural advantages or defensive qualities continue to offer attractive upside.
However, across the board, HSBC revised down price targets on 29 of the 31 stocks covered, reflecting higher required returns due to stagflation risks and uncertainty around policy and earnings visibility.