Over the past few months, majority of sub-sectors within MedTech have reported dismal performances because of the coronavirus pandemic-led disruptions. The $2.2-trillion emergency relief fiscal package announced in March had provided temporary financial assistance to hospitals and medical equipment businesses related to ventilators and masks. However, given the scale of the pandemic’s impact on the economy, this package failed to help the sector.
Meanwhile, investors heaved a sigh of relief after Moody’s recent prediction that healthcare revenues for 2020 may trump the original predictions.
Per Moody’s estimates published on Healthcare Finance, ambulatory surgery centers, dental and optometry offices were the MedTech sub-sectors that were highly impacted by COVID-19. However, even for these severely-impacted business spaces, 2020 revenues will drop approximately 10% instead of the prediction of a fall of around 15% made in April. Subsectors Driving MedTech Consistently
Amid this hullaballoo, an industry that has performed quite impressively since the outbreak is diabetes management. Within the space, a company that has particularly impressed despite business disruptions is Tandem Diabetes Care, Inc. (
TNDM Quick Quote TNDM - Free Report) . Its performance in the second quarter of 2020 was better than expected. Over the past year, the company’s share price has surged 87.3% compared with the industry’s 21.8% rise.
Another MedTech sub-sector which holds long-term potential is the ventilator business, which has witnessed unforeseen surge in demand amid the pandemic. Within this sub-sector, ResMed Inc. (
RMD Quick Quote RMD - Free Report) can be considered a strong performer. The key sleep-disordered breathing and other respiratory disorders solutions provider’s fourth-quarter fiscal 2020 results exceeded the Zacks Consensus Estimate. Strength in ventilator and mask sales amid the pandemic, growth across its key operating segments and robust adoption of digital health solutions buoy optimism. Over the past year, the company’s share price has surged 27.3% against the industry’s 1.6% fall. 3 MedTech Sectors to Invest in
Here we have selected three MedTech sub-sectors which have performed impressively amid the pandemic. From the sectors, we have picked three best stocks based on their recent performances and long-term earnings growth projections.
The first sub-sector that investors can consider is diagnostic testing. This April, the Congress appropriated $1.5 billion, from the $25 billion provided in the Paycheck Protection Program and Health Care Enhancement Act for SARS-CoV-2 testing, to the National Institutes of Health (per a report by the
New England Journal of Medicine). Given the current demand for diagnostic testing due to the rising cases of coronavirus infections, this segment holds a lot of potential in the near future. Investing in stocks from this business is expected to prove profitable.
Our pick from the diagnostic testing space is
QIAGEN N.V. ( QGEN Quick Quote QGEN - Free Report) . Responding to the pandemic earlier this year, this Zacks Rank #1 (Strong Buy) company scaled up RNA extraction kit and instrument production and launched QIAstat-Dx Respiratory SARS-CoV-2 Panel. In April, QIAGEN received the FDA’s approval for its therascreen BRAF V600E RGQ Polymerase Chain Reaction Kit (therascreen BRAF V600E) as a companion diagnostic to the BRAF inhibitor, BRAFTOVI (encorafenib), followed by the subsequent launch of the kit.
The company projects 22.3% earnings growth for the next five years. Over the past year, the company’s share price has rose 56.2% compared with the
industry’s 23.1% growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
Second on the list is the cardiac and vascular device space. During the initial days of the pandemic, this space majorly suffered due to the deferral of procedures. However, given that cardiac procedures cannot be deferred indefinitely, certain procedures are being performed even during the pandemic. However, with the gradual relaxation of lockdowns, this segment is on the rebound with enormous pent-up demand to meet. This holds great potential for investors seeking returns amid the market mayhem.
Our pick within this space is
Surmodics, Inc. ( SRDX Quick Quote SRDX - Free Report) , which is a renowned provider of medical devices. The Zacks Rank #2 (Buy) company exited the fiscal third quarter on a solid note. The company registered revenue growth in both of its core units. Management is upbeat about Surmodics’ partnership with Cook Medical for the commercialization of .014” and .018” low-profile PTA balloon catheters. Recent regulatory approvals bode well for the company. The company projects 10% earnings growth for the next five years. Over the past six months, the company has risen 25% compared with the industry’s 15.9% growth.
Amid the pandemic, the hospital sector is the best bet for investors. Despite the pandemic and widespread panic-selling, everybody needs healthcare.
Per a report by The Motley Fool, nearly $3.5 trillion was spent on healthcare in the United States. With the rapid growth of the healthcare sector compared to the overall economy, investing in such stocks seems prudent.
HCA Healthcare, Inc. ( HCA Quick Quote HCA - Free Report) from among hospital stocks, which is a renowned non-governmental operator of acute care hospitals in the United States. The Zacks Rank #2 company posted better-than-expected results for the second quarter in July. The company's multiple buyouts have helped increase its patient volume, enable network expansion and add hospitals to its portfolio. With the rise in usage of telehealth medicine, the company expanded its telemedicine product offerings. The company projects 11% earnings growth for the next five years. Over the past six months, the company’s stock has rallied 33.4% compared with the industry’s 27.2% growth. Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
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