President Donald Trump’s calling off of the summit with North Korean leader Kim Jong Un last Thursday was quite a shocker.
The abandonement of summit plans dealt a blow to the underpenetrated and emerging markets of Asia, which are a solid source of revenues for more than 80% of U.S.-based multinational companies. The effects of the political mayhem caused the MSCI’s broadest index of Asia-Pacific shares outside Japan, South Korea’s KOSPI and Japan’s Nikkei to plummet.
Major Wall Street indices, S&P 500 and the Dow Jones Industrial Average, lost ground as well.
Considering this trend of downward movements, the White House decided to conduct the meeting. The United States announced its plans to send a “pre-advance team” to Singapore to prepare for Trump-Kim summit on Jun 12.
MedTech appears to be one of the very few sectors that might shelter investors from the political tension. Shrugging off the current volatility, the Medical-Products industry has returned 0.2% since the call-off against the S&P 500’s fall of 0.4%.
In fact, analysts believe that the MedTech sector will be able to strengthen its foothold at a faster rate if the meeting goes on as planned.
This is because there are a number of U.S.-based MedTech companies operating in Asia. Post the success of the summit, these companies will be able to spread their network in North Korea and augment overall production. Per research by Statista, the MedTech market in the Asia-Pacific region is estimated to reach a worth of around $78 billion in 2018.
Buoyed by the encouraging projections, it would rather be interesting to see how the Medical-Product companies are placed amid the political turmoil.
4 MedTech Stocks to Gain
Meanwhile, the Medical-Product companies have already been gaining from organic growth, R&D innovation, higher consolidation, tax abolition as well as focus on emerging markets including Japan, South Korea, China, Vietnam, India, Philippines and more.
In fact, stakeholders in the medical universe have been eyeing these markets over the last couple of years. These companies are bullish about growing medical awareness, economic prosperity, an aging population, increasing wealth, government’s focus on healthcare infrastructure and expansion of medical insurance coverage in the APAC space.
Below, we take a look at four leading MedTech players that are gaining from the prospects in the APAC market:
Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, particularly focuses on broader emerging markets like India, China, Brazil and Turkey, whose economic and healthcare sectors are growing rapidly. In particular, safety-engineered products continue to drive growth in the emerging markets. We believe that exposure in these markets will boost the top line, which in turn will accelerate EPS growth.
This Zacks Rank #3 (Hold) company’s shares have returned 16.2% in a year, significantly higher than the S&P 500 index’s gain of 11.4%.
Baxter International’s (BAX - Free Report) solid presence in Asia, precisely India, is worth a mention. The company has research hubs in Japan and China. Recently, Baxter completed the acquisition of India-based Claris Injectables, a global generic injectables pharmaceutical company, for almost $625 million.
This Zacks Rank #2 (Buy) stock has outperformed the S&P 500 index in a year’s time. The stock has returned 21%.
Intuitive Surgical Inc’s (ISRG - Free Report) growing interest in the emerging markets, specifically in the APAC region, bodes well. In the past two years, the company’s procedure performance in Asia projected consistent strength. The company registered solid growth in China, Japan and Korea.
The Zacks Rank #1 (Strong Buy) company’s shares have returned 49.1% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Boston Scientific Corporation’s (BSX - Free Report) growth strategy comprises the pursuit of development opportunities outside the United Station through strengthening of global presence, inclusive of emerging markets. Against the backdrop of flattening or declining sales growth in developed markets like the United States and Europe, Boston Scientific is fortifying its foothold in the emerging markets of Brazil, Russia, India and China (BRIC).
In first-quarter 2018, business from the emerging markets registered 17% growth. Business in China was once again remarkable (up 23% year over year). The company is currently projecting an improvement in performance in China banking on the recent approval of SYNERGY.
This Zacks Rank #2 stock has returned 11.7% in a year.
Things to Remember
“Things are not so easy as they appear to be!”
Americans should never forget that former president George W. Bush referred North Korea as an ‘Axis of evil,’ as it sponsored terrorism and had solid access to nuclear weapons.
Further, North Korea's multiple trials of nuclear warheads have dampened the inter-country relationship. Analysts believe that an unforeseen summit may not solve these age-old problems. Further, no one can guarantee that Kim Jong Un’s ‘tremendous anger and open hostility’ will not offend Trump anymore as it did last week.
However, Trump’s team is expecting to reach an agreement to settle the North Korean nuclear and other issues in the meeting.
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