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4 MedTech Stocks Up More Than 100% in 2020 With Room to Run
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The year 2020 has been no less than a rollercoaster ride for MedTech. Following their 10 years of concerted efforts, the industry players finally got to celebrate the permanent repeal of the medical device tax. However, their happiness didn’t last long with the coronavirus catastrophe hurting the economy like never before, jeopardizing domestic as well as international trade.
That said, the pandemic while wreaking havoc on almost every sector and forcing many industries to struggle for existence, has had a somewhat positive impact on the country’s MedTech space. With rising cases of COVID-19 and growing demand for critical care support, this industry was forced to evolve rapidly through the year 2020 to combat the ongoing crisis.
The NASDAQ-based MedTech-loaded ETF Index iShares U.S. Medical Devices (IHI) has witnessed 22% gain in the year so far. At the same time, SPDR S&P Health Care Equipment ETF (XHE) has gained 33.4% riding on this evolving trend.
MedTech Trend in 2020
While there was a sizable drop in elective and non-COVID-19 procedures, demand for diagnostic tests reached a record level this year, translating into all-time highs for makers of these tests. We may take the example of diagnostic testing majors, Quest Diagnostics and its peer LabCorp. In the course of expanding their COVID-19 testing capacities, these stocks reached their all-time highs of $131.81 and $218.77 on Aug 3 and Nov 5, respectively. Further, Hologic (HOLX - Free Report) banking on its significant progress in the line of SARS-CoV-2 based molecular diagnostic testing, reached an all-time high of $76.67 on Nov 5.
Other than these, critical medical supplies (CT machines, dialysis equipment or ECMO machines), personal protective equipment (PPE) and ventilator makers comprise a large part of the MedTech success story amid one of the greatest disasters in history. Through 2020, masks and ventilators maker, ResMed (RMD) saw significantly ramped-up demand for its critical care products and the stock eventually reached its all-time high of $220.59 on Nov 9.
Further, with an increase in the adoption of digital platforms within the medical device space, remote monitoring, robotic surgeries, big-data analytics, bioprinting, 3D printing, electronic health records (EHR), predictive analytics, real-time alerting and revenue cycle management services gained prominence in the pandemic period. This line of healthcare suddenly became a major choice for contactless healthcare services.
Will This Pattern Last in 2021?
As expected, Pfizer (PFE - Free Report) and Moderna (MRNA - Free Report) , following the receipt of fast Emergency Use Authorization from the FDA, have started vaccine shot distributions from last week. However, at the same time, the uncertainty regarding the new COVID-19 mutant and how effective the vaccine shots are on the new strains are keeping the overall market sentiment muted.
Meanwhile, the failure of public health measures to limit infection transmission followed by the resurgence of new COVID-19 cases are clear indications that the ongoing behavioral change in MedTech is here to stay. Hologic’s CEO Stephen MacMillan recently noted that COVID-19 is likely to be the biggest molecular testing category for the next couple of years (per a Medtechdive report).
Here, we should also talk about the state of MedTech valuation, which is on the rise and has already grown stronger than the pre-pandemic level. During the initial phase of the pandemic, MedTech sector’s valuation hit a low in March 2020. However, in no time, it recovered stronger than expected. An EY Global report claims that by the end of August 2020, MedTech’s valuations were 50% above its January 2019 level.
The digital health companies were one of the major growth drivers (valuation up 65%) on growing investors’ sentiment over enhanced use of virtual health and other remote technologies. In fact, the outbreak of the new COVID-19 strain is likely to give a further push to the contact-less healthcare trend in 2021.
Our Picks
The above trend is expected to help the following MedTech stocks, maintain market beating momentum in 2021. We have narrowed our search to the following stocks based on a favorable Zacks Rank and other relevant metrics for 2021.
YTD Share Movement
The first on our list is CareDx, Inc. (CDNA - Free Report) . This Zacks Rank #2 (Buy) stock has soared 257.4% so far this year. In November, in a major development, this precision medicine company received favorable reimbursement pricing for its AlloSure Heart, which is expected to broaden accessibility to HeartCare, a multi-modality and non-invasive solution for managing the care of transplant patients.
The company’s prospects for 2021 (ending December 2021) seem to be encouraging as over the past 60 days, all four analysts have raised their estimates for the same. For this period, earnings estimates have moved 161.5% north. Its 2021 estimated sales growth stands at 32.4% whereas EPS growth is expected to grow 148.8%.
Our next pick is Fulgent Genetics, Inc. (FLGT - Free Report) , a well-known technology company providing comprehensive testing solutions. This Zacks Rank #1 (Strong Buy) stock has soared 285.9% so far this year. The company is riding on strong demand for its COVID-19 tests. Also, the company posted solid third-quarter results amid the pandemic-led challenging business climate.
Over the past 60 days, two analysts have raised their 2021 estimates. For this period, earnings estimates have moved 204.8% north. Its 2021 estimated sales growth stands at 19.2% whereas its EPS growth is expected to be 31%.
Owens & Minor, Inc. (OMI - Free Report) is the next stock on our list. This Zacks Rank #1 stock has soared 484.5% so far this year. This healthcare solutions company exhibited improved results courtesy of increased productivity, higher manufacturing output related to personal protective equipment (PPE), favorable revenue mix, and continued execution and delivery of operating efficiencies for the greater part of 2020.
Over the past 60 days, two analysts have raised their 2021 estimates. For this period, earnings estimates have moved 4.3% north. Its 2021 estimated sales growth stands at 6.2% whereas its EPS growth is projected to be 11.8%.
Our final pick is Quidel Corporation (QDEL - Free Report) . This Zacks Rank #1 stock has soared 171.3% so far this year. The company has been making efforts to combat the deadly coronavirus spread by expanding testing capabilities and rolling out molecular and antigen solutions needed to diagnose COVID-19.
Over the past 60 days, all four analysts have raised their 2021 estimates. For this period, earnings estimates have moved 72.4% north. Its 2021 estimated sales growth stands at 93.7% whereas its EPS growth is likely to be 110.3%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
Image: Bigstock
4 MedTech Stocks Up More Than 100% in 2020 With Room to Run
The year 2020 has been no less than a rollercoaster ride for MedTech. Following their 10 years of concerted efforts, the industry players finally got to celebrate the permanent repeal of the medical device tax. However, their happiness didn’t last long with the coronavirus catastrophe hurting the economy like never before, jeopardizing domestic as well as international trade.
That said, the pandemic while wreaking havoc on almost every sector and forcing many industries to struggle for existence, has had a somewhat positive impact on the country’s MedTech space. With rising cases of COVID-19 and growing demand for critical care support, this industry was forced to evolve rapidly through the year 2020 to combat the ongoing crisis.
The NASDAQ-based MedTech-loaded ETF Index iShares U.S. Medical Devices (IHI) has witnessed 22% gain in the year so far. At the same time, SPDR S&P Health Care Equipment ETF (XHE) has gained 33.4% riding on this evolving trend.
MedTech Trend in 2020
While there was a sizable drop in elective and non-COVID-19 procedures, demand for diagnostic tests reached a record level this year, translating into all-time highs for makers of these tests. We may take the example of diagnostic testing majors, Quest Diagnostics and its peer LabCorp. In the course of expanding their COVID-19 testing capacities, these stocks reached their all-time highs of $131.81 and $218.77 on Aug 3 and Nov 5, respectively. Further, Hologic (HOLX - Free Report) banking on its significant progress in the line of SARS-CoV-2 based molecular diagnostic testing, reached an all-time high of $76.67 on Nov 5.
Other than these, critical medical supplies (CT machines, dialysis equipment or ECMO machines), personal protective equipment (PPE) and ventilator makers comprise a large part of the MedTech success story amid one of the greatest disasters in history. Through 2020, masks and ventilators maker, ResMed (RMD) saw significantly ramped-up demand for its critical care products and the stock eventually reached its all-time high of $220.59 on Nov 9.
Further, with an increase in the adoption of digital platforms within the medical device space, remote monitoring, robotic surgeries, big-data analytics, bioprinting, 3D printing, electronic health records (EHR), predictive analytics, real-time alerting and revenue cycle management services gained prominence in the pandemic period. This line of healthcare suddenly became a major choice for contactless healthcare services.
Will This Pattern Last in 2021?
As expected, Pfizer (PFE - Free Report) and Moderna (MRNA - Free Report) , following the receipt of fast Emergency Use Authorization from the FDA, have started vaccine shot distributions from last week. However, at the same time, the uncertainty regarding the new COVID-19 mutant and how effective the vaccine shots are on the new strains are keeping the overall market sentiment muted.
Meanwhile, the failure of public health measures to limit infection transmission followed by the resurgence of new COVID-19 cases are clear indications that the ongoing behavioral change in MedTech is here to stay. Hologic’s CEO Stephen MacMillan recently noted that COVID-19 is likely to be the biggest molecular testing category for the next couple of years (per a Medtechdive report).
Here, we should also talk about the state of MedTech valuation, which is on the rise and has already grown stronger than the pre-pandemic level. During the initial phase of the pandemic, MedTech sector’s valuation hit a low in March 2020. However, in no time, it recovered stronger than expected. An EY Global report claims that by the end of August 2020, MedTech’s valuations were 50% above its January 2019 level.
The digital health companies were one of the major growth drivers (valuation up 65%) on growing investors’ sentiment over enhanced use of virtual health and other remote technologies. In fact, the outbreak of the new COVID-19 strain is likely to give a further push to the contact-less healthcare trend in 2021.
Our Picks
The above trend is expected to help the following MedTech stocks, maintain market beating momentum in 2021. We have narrowed our search to the following stocks based on a favorable Zacks Rank and other relevant metrics for 2021.
YTD Share Movement
The first on our list is CareDx, Inc. (CDNA - Free Report) . This Zacks Rank #2 (Buy) stock has soared 257.4% so far this year. In November, in a major development, this precision medicine company received favorable reimbursement pricing for its AlloSure Heart, which is expected to broaden accessibility to HeartCare, a multi-modality and non-invasive solution for managing the care of transplant patients.
The company’s prospects for 2021 (ending December 2021) seem to be encouraging as over the past 60 days, all four analysts have raised their estimates for the same. For this period, earnings estimates have moved 161.5% north. Its 2021 estimated sales growth stands at 32.4% whereas EPS growth is expected to grow 148.8%.
Our next pick is Fulgent Genetics, Inc. (FLGT - Free Report) , a well-known technology company providing comprehensive testing solutions. This Zacks Rank #1 (Strong Buy) stock has soared 285.9% so far this year. The company is riding on strong demand for its COVID-19 tests. Also, the company posted solid third-quarter results amid the pandemic-led challenging business climate.
Over the past 60 days, two analysts have raised their 2021 estimates. For this period, earnings estimates have moved 204.8% north. Its 2021 estimated sales growth stands at 19.2% whereas its EPS growth is expected to be 31%.
Owens & Minor, Inc. (OMI - Free Report) is the next stock on our list. This Zacks Rank #1 stock has soared 484.5% so far this year. This healthcare solutions company exhibited improved results courtesy of increased productivity, higher manufacturing output related to personal protective equipment (PPE), favorable revenue mix, and continued execution and delivery of operating efficiencies for the greater part of 2020.
Over the past 60 days, two analysts have raised their 2021 estimates. For this period, earnings estimates have moved 4.3% north. Its 2021 estimated sales growth stands at 6.2% whereas its EPS growth is projected to be 11.8%.
Our final pick is Quidel Corporation (QDEL - Free Report) . This Zacks Rank #1 stock has soared 171.3% so far this year. The company has been making efforts to combat the deadly coronavirus spread by expanding testing capabilities and rolling out molecular and antigen solutions needed to diagnose COVID-19.
Over the past 60 days, all four analysts have raised their 2021 estimates. For this period, earnings estimates have moved 72.4% north. Its 2021 estimated sales growth stands at 93.7% whereas its EPS growth is likely to be 110.3%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>