Key insights
- UBS anticipates a MedTech sector re-rating driven by AI integration and improving EPS momentum. They highlight Convatec, Demant, Ottobock, and Ambu as top picks. AI is expected to strengthen existing MedTech companies through software upgrades and market expansion. While focused on European companies, successful AI integration in MedTech could positively influence US-based counterparts and investor sentiment in the broader sector.
Investing.com -- European MedTech is entering a potential earnings inflection phase just as valuations sit near decade lows, according to UBS.
The broker believes investor fears around AI disruption are overdone, arguing that artificial intelligence is more likely to strengthen incumbent MedTech players through software upgrades, recurring revenue opportunities and market expansion.
UBS expects improving EPS momentum into H2 2026 and selective AI tailwinds to drive a sector re-rating, with a handful of companies standing out as its top picks.
Convatec
UBS ranks Convatec among its highest-conviction calls, expecting both earnings upgrades and valuation re-rating potential.
The broker believes improving operational execution, resilient healthcare demand and recovering sentiment toward MedTech could support stronger medium-term growth.
UBS also sees the company benefiting from the sector’s broader recovery while still trading at historically discounted valuation levels.
Demant
UBS views Demant as one of the clearest AI beneficiaries in MedTech.
The broker argues that AI-powered software upgrades could reshape the hearing-aid business model by enabling recurring monetisation between hardware replacement cycles.
UBS estimates this shift could add 1-2 percentage points to long-term market growth, while the industry’s tightly integrated hardware-software ecosystem protects incumbents from disruption and leaves Demant well-positioned to gain.
Ottobock
UBS favours Ottobock in human bionics, citing its leadership in AI-enabled prosthetics and digital patient-care workflows.
The broker expects AI to expand the addressable market through more advanced and personalised prosthetic functionality, while also improving rehabilitation and monitoring efficiency.
UBS believes Ottobock’s scale, R&D strength and integrated care network create meaningful competitive advantages as adoption of intelligent prosthetics accelerates.
Ambu
UBS identifies Ambu as its preferred play in single-use endoscopy.
The broker believes AI-driven imaging and workflow improvements could accelerate the shift toward disposable endoscopes by improving throughput and expanding clinical applications.
At the same time, UBS argues that high manufacturing and regulatory barriers should continue to favour established players, positioning Ambu to capture long-term market share gains.
Philips
In medical imaging, UBS remains more measured on the overall AI opportunity but still sees Philips as its preferred stock.
The broker expects AI to have a broadly neutral impact on incumbent imaging hardware revenues, though Philips could benefit from software and post-processing opportunities.
UBS believes expectations for widespread disruption in imaging are overstated, but sees scope for Philips to outperform through operational delivery and improving fundamentals.
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