The global economy continues to reel under the impact of the coronavirus pandemic. This is reflected in the consistent tumble across several global stock market indices over the past few months and a worsening unemployment scenario.
Despite a temporary market rebound and a drop in unemployment rate around June, investor sentiment remains largely diluted owing to resurgence in fresh COVID-19 cases in several regions of the United States.
Per a report by Fitch Ratings published in September, the global GDP is expected to contract as much as 4.4% in 2020.
Glimpse Into MedTech Scenario
So far, the impact of the pandemic on the MedTech sector has been mixed. In the initial months of the pandemic, global manufacturing and supply chain disruptions as well as deferral of elective medical/surgical procedures wreaked havoc on the MedTech sector, causing many to slash or withdraw their full-year guidance.
However, the industry, being more resilient than others, saw tables turn from the second quarter of the year. Several MedTech players’ second-quarter results highlighted sequential business improvement through April, May and June as elective procedure volumes started picking up pace, albeit slowly. This encouraging trend is expected to have continued through the soon-to-be-reported third quarter.
As a result, lately investor confidence has started improving on several MedTech stocks, thanks to a number of positive developments like launch of COVID-19 diagnostic tests and strong consumer interest toward digital healthcare options, including remote monitoring technologies.
In this regard, companies like Abbott Laboratories (ABT - Free Report) , Thermo Fisher Scientific (TMO - Free Report) and Masimo Corporation (MASI - Free Report) have reported improvement in their second-quarter performances.
Best Strategy for MedTech Investors Now
In the midst of a volatile economy, it’s always difficult to ascertain whether the current market trend will persist. Under such situations, it would be prudent to bet on MedTech stocks with a large market cap as these are more adept at thriving than the smaller stocks in this space. Large-cap stocks are usually backed by solid long-term growth potential. Notably, due to the ongoing pandemic-induced panic-selling, prices of many of such stocks have been dragged down, making them trade at cheaper rates.
3 Impressive Stocks to Bet On
The following are a few MedTech companies with market cap of more than $1 billion and Growth Score of A or B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
ResMed, Inc. (RMD - Free Report) : In September 2020, this Zacks Rack #2 company introduced its AirTouch N20 nasal mask, the company’s first CPAP nasal mask equipped with a memory foam cushion and softest nasal mask ever. In May 2020, the company launched a cloud-based remote monitoring software for ventilators and Lumis bilevel devices across Europe, via its AirView platform.
The company has a Growth Score of A and a market cap of $24.74 billion.
For the next five years, the company’s earnings growth rate is anticipated at 13.9%, which is favorable compared to the industry’s 13.7%.Over the past year, the company’s shares have outperformed the industry. The stock has gained 33.6% compared with the industry’s 6.2% growth.
LHC Group, Inc. (LHCG - Free Report) : In October, this Zacks Rack #2 company finalized two new joint venture (JV) agreements in Georgia and acquired a hospice provider in Colorado, each effective Oct 1. In August, the company signed a definitive JV agreement with University Health Care System to enhance home health and hospice services across eight cities in Georgia and South Carolina.
The company has a Growth Score of A and a market cap of $6.97 billion.
For the next five years, the company’s earnings growth rate is anticipated at 13.1%, which is favorable compared to the industry’s 12.5%.Over the past six months, the company’s shares have outperformed the industry. The stock has gained 58.7% compared with the industry’s 51.9% growth.
NovoCure Limited (NVCR - Free Report) : This Zacks Rack #2 company exited the second quarter with better-than-expected results. The year-over-year top and bottom-line growth of the company has been encouraging. The company is currently working on strengthening its foothold in the cancer treatment space by developing and commercializing its innovative therapy, Tumor Treating Fields. For investors’ note, Tumor Treating Fields is the company’s proprietary platform technology.
The company has a Growth Score of A and a market cap of $12.84 billion.
For 2021, earnings growth rate is anticipated at 94.4%, which is favorable compared with the industry’s 25.9%.Over the past six months, the company’s shares have outperformed the industry. The stock has gained 84.7% compared with the industry’s 51.9% growth.
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