The White House recently admitted that the United States might miss President Joe Biden’s Jul 4 mass vaccination target. Added to this, the WHO’s latest statement about the Delta variant of COVID-19 “becoming the globally dominant variant of the disease” is once again creating a huge uproar across the MedTech continuum, raising a question mark on whether or not the Biden-promised all-American summer of freedom will actually be attained.
Changing MedTech Landscape — Risk Return Tradeoff
Through the pandemic months, the fortune of the MedTech space kept being at crossroads between maintaining the pre-pandemic business pattern and adapting to the pandemic-induced shift in healthcare needs. Those who fast transformed their business models as per the pandemic requirements, held their grounds strongly through those turbulent months. For the rest, the pandemic came as the decade’s biggest business disaster.
This sector, however, has been gaining steam, of late, on anticipations of the economy getting back to full-fledged reopening and normalization based on the mass vaccination mission. A number of the MedTech stocks, in the last couple of months, have confirmed strong rebounds in their base businesses, which had been otherwise disrupted through the pandemic months, due to the significantly sluggish demand for non-COVID MedTech procedures.
Zimmer Biomet ( ZBH Quick Quote ZBH - Free Report) recently noted that it expects to see seasonality in revenues through 2021 that will resemble the pre-COVID trend. Invisalign systems manufacturer and major dental stock Align Technologies ( ALGN Quick Quote ALGN - Free Report) too has noted about higher sales of Invisalign Clear Aligners on an improving shipment volume globally. This base-business recovery rate has been on the rise as companies are finally starting to meet the pent-up demand following months of suppressed spending. Job Market Data Aligns With Scenario The June–release labor market data (from the U.S. Bureau of Labor Statistics) clearly reflected this uptick, with total non-farm payroll employment rising significantly in May on notable job gains within the healthcare space. Employment in health care continued to trend higher, with 23,000 new jobs highlighting a gain in ambulatory health care services. Will the Volatility Return With the Latest COVID Strain?
Investors are, however, once again apprehensive that the latest buzz about the highly-transmissible coronavirus Delta variant would again put the brakes on the base business recovery within the MedTech space. A Wall Street Journal Jun 22 report has stressed on urgency for the nationwide vaccination drive in the United States. This Delta variant is spreading so rapidly across the nation that it could become the dominant strain in the next two to three weeks, says the report.
Similar to the initial pandemic months, market watchers are worried about another plunge in hospital and doctors’ office visits, along with deferral of procedures, which might significantly pull the prices of these stocks down.
Bet on Safer Stocks With Robust Fundamentals
A full vaccination of the nation will likely need more time and the end of the pandemic is still not in sight. Nevertheless, there are great companies trading strongly, which will continue to benefit irrespective of the market movement.
Amid such economic unrest, investors should focus on stocks that have held their ground and outshone the respective sub-industries despite the challenging business climate through the entire pandemic period based on the companies’ robust business fundamentals and growth strategies.
Listed below are four MedTech stocks with a favorable Zacks Rank and solid growth parameters that investors can consider during these uncertain times.
Share Price Performance Through the Pandemic Period Image Source: Zacks Investment Research
Henry Schein, Inc. ( HSIC Quick Quote HSIC - Free Report) : This Zacks Rank #1 (Strong Buy) stock is witnessing strong demand for its personal protective equipment (PPE) and COVID-19-related products. Of late, it has also seen a solid rebound in sales of its legacy dental and medical business. A strong solvency position is a plus.
The company has an expected earnings and sales growth rate of 35.7% and 16%, respectively, for 2021. Its long-term estimated earnings growth is pegged at 11.2%. The stock has risen 30.3% through the pandemic phase.
BellRing Brands, Inc. ( BRBR Quick Quote BRBR - Free Report) : Through the pandemic months, growth within the company’s nutrition category has been stable. Particularly, favorable macro trends, such as health and wellness, snacking and mainstreaming of protein, are driving this business momentum. At present, all of the company’s channels are growing with eCommerce, food and mass leading the way.
This Zacks Rank #2 (Buy) stock has a projected earnings and sales growth rate of 39.3% and 19.7%, respectively, for fiscal 2021 (ending September 2021). Its long-term expected earnings growth rate is pegged at 21.6%. The stock has appreciated 86.4% through the pandemic phase.
Maravai LifeSciences Holdings, Inc. ( MRVI Quick Quote MRVI - Free Report) : As a supplier of solutions to other life sciences companies, the company has been in a position to benefit from multiple tailwinds that have been influencing the sector, ranging from early discovery through clinical trials to the commercialization of healthcare products. This should get reflected in its 2021 performance.
This Zacks Rank #1 stock has a sales growth rate of a whopping 150.4% for 2021 (ending September 2021). In its first quarter of 2021, the company reported an earnings surprise of 36.8%. The stock has gained 44.7% through the pandemic phase.
National Vision Holdings, Inc. ( EYE Quick Quote EYE - Free Report) : The company’s contact lens category continued to see growth in average ticket as contact lens customers are increasingly adopting newer technology lenses that have higher prices -- a trend that we expect to continue. The extension of the partnership with Walmart through 2024 looks encouraging.
This Zacks Rank #1 stock has an anticipated earnings and sales growth rate of 19.8% and 17.6%, respectively, for 2021. Its long-term projected earnings growth is pegged at 23%. The stock has surged 61.9% through the pandemic phase.
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