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3 Stocks in Focus on Evolving MedTech Trends Amid COVID-19

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The crisis triggered by the COVID-19 pandemic has been taking its toll on the global economy. Apart from bringing day-to-day life to a halt, the pandemic has transformed the health care infrastructure, breaking decade-old assumptions about how people visualize medicines, doctors, hospitals, insurance companies and pharmaceutical manufacturers.

Amid the pandemic, global supply chain disruption and the deferral of various non-essential medical procedures affected MedTech companies to a large extent. Supply-related hazards affected all sector stalwarts, which have significant international exposure like Medtronic (MDT - Free Report) , Boston Scientific (BSX - Free Report) or Baxter (BAX - Free Report) .

Procedural deferrals, orthopedic and dental practices, which majorly depend on elective surgical procedures and preventive treatments, were the worst-affected. Per a report by Dentistry iQ, collected revenues in dental practices declined 6% in 2020.

In line with this, Align Technology (ALGN - Free Report) , which deals in dental supplies, witnessed a sharp decline in segmental revenues in second-quarter 2020. Revenues for both clear aligners and imaging systems and CAD/CAM services declined as practitioners dealt with office closures due to COVID-19. However, with the improving economy scenario, the company is witnessing a rebound in its business.

Opportunities Amid Disruption

However, as the crisis unfolded, it presented an opportunity for healthcare companies to dig the best out of it.  Among all industries, the main impact of the pandemic on the healthcare sector has been the acceleration of trends that were already well underway.

Quick developments in artificial intelligence (AI) technology, device connectivity and virtual monitoring have enabled healthcare companies to effectively respond to the growing demand for critical products such as personal protective equipment (PPE) and ventilators. By being able to quickly scale up R&D and manufacturing efforts, the sector has been making significant efforts in reducing the pressure on healthcare systems.

Below we discuss three MedTech trends, which showed steady momentum through the pandemic and are likely to sustain even after the mayhem draws to a close.

Increase in Telehealth Offering

The pandemic has highlighted the importance of telemedicine among other things, thus transforming the traditional healthcare system. Telemedicine or the option of availing medical advice digitally has become a major choice for contactless healthcare services amid surging coronavirus infections. The medical device market is currently more than ready to meet the demand for AI-driven diagnostics and monitoring devices.

Per a survey by McKinsey, in April 2020, overall telehealth utilization for office visits and outpatient care was 78 times higher than in February 2020. In fact, 76% of U.S. consumers reported that they are interested in using telehealth in the future as a way to complement in-person visits to the doctor.   

Frost & Sullivan forecasts seven-fold growth in telehealth by 2025 – a five-year compound annual growth rate of 38.2%. This opens up huge opportunities and challenges for providers and vendors alike. More practical applications of AI and robotics, with advancements such as interactive virtual assistants enabling more opportunities for care, are expected to grow.

Here we ask investors to keep a close eye on Allscripts Healthcare Solutions Inc. (MDRX - Free Report) . With the company’s Veradigm business unit’s recent collaboration with Lash Group, Allscripts aims to gain traction in the global electronic health record solutions business. Further, its subsidiary, Allscripts Healthcare LLC, collaborated with Revo Health to offer Allscripts Practice Management and Payerpath to all of the latter’s Infinite Health Collaborative (i-Health) clinics.

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Over the past year, this Zacks Rank #2 (Buy) company has surged 175.9% compared with its industry’s rally of 1.1%. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Growth in Optical Market

The COVID-19 mayhem has boosted eyewear adoption trends in 2020. Country-wide lockdowns and the implementation of Work From Home (WFH) models by several companies have resulted in people spending more time on their laptops, desktops, and mobile phones for work and entertainment purposes. The longer screen times and the resulting rise in eye fatigue have facilitated the need to use vision correction and anti-fatigue glasses. This has allowed eyewear companies to capture higher sales of anti-fatigue and blue light canceling lenses.

Per a report by Grand View Research, the global eyewear market size is expected to expand at a CAGR of 8.5% from 2021 to 2028.

Within this space, investors can keep a close watch on National Vision Holdings, Inc. (EYE - Free Report) . The company continues to gain on solid positive comparable store sales (comps) in eyeglasses. First-quarter 2021 comps growth was 18.2%.The 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 expected to continue. National Vision has raised long-term projected whitespace opportunity by 300 stores to at least 2,150 locations (effective from 2021). It expects the optical category in a post-COVID environment to remain ready for expansion.

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Over the past year, this Zacks Rank #1 company’s shares have surged 76.3% compared with its industry’s rally of 16%.

Rise in Diagnostic Testing

The past one-and-a-half years saw the medical diagnostics sector reach its zenith. In the wake of the pandemic, the demand for molecular testing, regarded as the gold standard for diag¬nosing infectious diseases, exploded. Accordingly, diagnostic testing remained the backbone of the COVID-19 response, supporting containment efforts to mitigate the outbreak. In Europe and the United States alone, molecular-diagnostic demand rose 20-fold between March and October 2020.

Added to this, the WHO’s latest statement about the Delta variant of COVID-19 “becoming the globally dominant variant of the disease” is fuelling demand for diagnostic testing.

Investors can keep a close watch on Quest Diagnostics, Inc. (DGX - Free Report) .The stock  is expected to witness growth in direct-to-consumer testing opportunity following the COVID-19 pandemic, as patients seek greater control of their health care and the crisis accelerates the shift to digital technologies. Per a Bloomberg article, direct-to-consumer testing for medical needs like colorectal cancer and others could bring in $250 million in revenues for Quest by 2025, in a total market worth about $2 billion.

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Over the past year, this Zacks Rank #3 (Hold) company’s shares have gained 10.5% against the industry’s fall of 9.4%.