GE HealthCare Stock Falls Despite Earnings Beat. Tariffs Are Creating Confusion.

Tariff headwinds have weighed on GE HealthCare shares recently. (Business Wire)

GE HealthCare Technologies stock fell Wednesday after its second-quarter earnings beat expectations and it raised full-year financial guidance. Tariffs have created confusion and headwinds.

GE Healthcare reported earnings per share of $1.06 from sales of just over $5 billion. Wall Street was looking for EPS of 92 cents from sales of just under $5 billion, according to FactSet. A year ago, in 2024’s second quarter, the company reported earnings of $1 a share from sales of $4.8 billion.

Sales rose 3% year over year, and orders exceeded sales by about 7%.

“We were pleased with solid orders and revenue performance in the second quarter across all segments, reflecting healthy customer investment in capital equipment,” said CEO Peter Arduini in a statement. “We are driving long-term value through our strategic priorities and are well-positioned operationally.”

GE Healthcare raised guidance, too. Operating profit rose to a midpoint of 15.3% from 14.3%. EPS guidance moved to a range of $4.43 to $4.63 a share. The $4.53 midpoint includes an impact from tariffs of 45 cents a share, down from an impact of 85 cents estimated in April.

The midpoint of GE HealthCare’s original EPS guidance, before tariffs, was $4.68. Backing out tariffs from the current number implies guidance has moved up to about $4.98 from $4.68.

Investors initially looked pleased with the update, then reconsidered. Shares were up by about 3% in premarket trading at $80. The gains didn’t last, though, and Ge HealthCare stock closed at $71.64, down 7.8% on Wednesday. The S&P 500 and Dow Jones Industrial Average fell 0.1% and 0.4%, respectively.

It’s a big drop considering the beat-and-raise quarter. Citi analyst Joanne Wuensch didn’t seem alarmed by the numbers.

“At first glance, the beat-and-raise should clear the hurdle, with the core and tariffs providing upside,” she wrote on Wednesday. She rates shares Buy and has an $89 price target for the stock.

On the company’s earnings conference call, management noted that backlog was at record levels and profit margins declines mainly due to tariff headwinds. Third-quarter earnings is projected to be down “high-single digits” in percent terms year over year. That’s a little better than the 13% decline Wall Street analysts were forecasting.

Order growth decelerated from the first quarter. That might have created some concern, but management called the spending environment “robust.”

Starting points also don’t help explain the drop. Coming into Wednesday trading, the stock was down about 1% this year and about 5% over the past 12 months. Falling estimates have weighed on investor sentiment. Wall Street projects 2025 earnings of about $4.06. At the start the year, that estimate was closer to $4.67.

Estimates should start to rise after the second-quarter results. The company’s new guidance implies second-half earnings of about $2.61; Wall Street projects about $2.14.

“Sometimes it’s just not enough,” added Wuensch. “This summarizes [this quarter] where, despite a beat and raise, [the stock] declined post-print on concerns about the order book, more tepid China commentary, and the post-Liberation-Day recovery. This doesn’t mean the quarter wasn’t good.”

GE HealthCare is the third of the three GEs to report. GE Aerospace and GE Vernova reported better-than-expected earnings over the past couple of weeks. Vernova stock rose 14.6% after earnings. GE Aerospace stock fell 2.2%, despite the solid report.

GE Aerospace and GE HealthCare results show that stocks don’t always rise on better-than-expected earnings.

Write to Al Root at allen.root@dowjones.com