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Healthineers? It sounds like a couple of Mouseketeers grew up and launched a startup to disrupt the health-care industry.

The oft-criticized name, merging the words “health” and “engineers,” actually belongs to a unit of German industrial conglomerate Siemens SIE, +0.97% that had a successful trading debut last month. It’s similar to Walt Disney’s “imagineers” moniker for some of its employees.

While shares in Siemens Healthineers SHL, -1.16% have danced higher so far, investors might not want to bet that big gains will continue. This company’s business — health-care technology — is promising on many counts, but some analysts don’t view the stock as a bargain.

Analysts say Royal Philips PHIA, -0.09% looks like the best competitor to compare Healthineers against. The Dutch company gets about 66% of its revenue from health-care equipment and services, with its lighting, baby bottles, and other products having a smaller impact on the top line. Other rivals include General Electric’s GE, +3.93% health-care business, Toshiba 6502, -1.38%  , Hitachi 6501, +0.09% , and Abbott Laboratories ABT, -1.15%  .

Healthineers deserves a premium to Philips, argue Morgan Stanley analysts led by Ben Uglow, because it boasts higher profit margins and stronger cash flow.

However, Healthineers shares already command a richer price by some metrics to Philips, which doesn’t suggest it has lots of room to run. The stock trades at around 23 times forward-year estimated earnings to Philips’ 20.

A fair value for Healthineers shares is around 34 euros ($42), says Landesbank Baden-Württemberg analyst Volker Stoll. That’s just a little above the stock’s recent print of €33. Expecting only a moderate rally, the LBBW analyst puts a Hold rating on the stock in a recent note.

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A key Healthineers product category — its Atellica platform that provides in-vitro diagnostics, or IVD, for blood and other medical samples — is causing consternation among some investors and analysts. “The equity story and valuation are very much focused on a potential recovery of Healthineers’s IVD business,” say the Morgan Stanley analysts, and that “will primarily be a function of the success of the new Atellica platform.” Some skeptics reportedly fret that five prior Healthineers diagnostics platforms gave up market share, while others note would-be customers face relatively high switching costs.

Equinet Bank analyst Zafer Ruzgar, who has an Accumulate rating on Healthineers shares, praises Atellica in a recent note as a “highly efficient, automated, and flexible platform” that could drive “accelerating growth” for the company. But his price target of €35.50 doesn’t suggest a monster rally for the stock, but rather a 12-month gain of about 8%.

Siemens publicly listed Healthineers as part of its push to chop away at its sprawl, saying the business will have more “entrepreneurial flexibility” now that it’s standing on its own. Siemens raised $5.2 billion with the mid-March listing in Frankfurt, selling a 15% stake, and remains the majority shareholder.

Shares were priced at €28, in the lower half of an expected range of €26 to €31, fostering chatter about lowballing to ensure interest in the offering. The stock popped after its debut to nearly €36, then pulled back in early April.

The diagnostics business, home to the Atellica platform, provides about 29% of Healthineers revenue, according to data from Bernstein analysts led by Lisa Clive. The company’s other two divisions — imaging and advanced therapies — deliver 60% and 11% of revenues, respectively. Healthineers, which is considered the world’s largest maker of medical-imaging gear, generated about $17 billion in revenue in its last fiscal year and has a presence in 75 countries through more than 47,000 employees.

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To be sure, bulls point to valuation metrics that are more favorable to the company, such as EV/Ebitda (enterprise value to earnings before interest, taxes, depreciation, and amortization). They also highlight an encouraging backdrop for the company, whose market cap is about $41 billion. Huge parts of the world are graying and paying up for high-tech medical services. Emerging markets are increasingly buying big-ticket equipment. Chronic conditions are on the rise.

But the growth story could already be baked into the stock, while the challenges may not be.

This report also appears at Barrons.com.

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