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Has the Trade Debacle Ended for US MedTech Space? 3 Picks
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Trade fears were somewhat conquered when Washington and Beijing agreed to not levy further tariffs till March 2019. In fact, China is likely to levy further cuts on a wide range of imports, which includes medical diagnosis devices. That’s not all. U.S.-based companies like Varian Medical have received approval from the United States Trade Representative for the exclusion of its flagship Halcyon radiotherapy systems from Section 301 tariffs (read More: Varian Medical's Halcyon Excluded From Trade Tariffs).
Meanwhile, a report by CISION opines that the United States is the largest Medical Product market in the world, raking in more than $180 billion a year, courtesy of rising research and development activities and rising exposure to artificial intelligence (AI).
So, it would be interesting to analyze how investors can make the most of this.
What Will 2019 Offer to the MedTech Fraternity?
This year is expected to be flooded with innovation and new technologies as players from outside the sector are also likely to enter the $3.5-trillion healthcare space. Notably, tech behemoths like Amazon (AMZN - Free Report) , JPMorgan (JPM - Free Report) and Berkshire Hathaway will provide healthcare benefits to 1 million employees.
Per Moody’s Investors Service, the U.S medical device industry will be aided by earnings growth from new products and solid demand in emerging markets, which is expected to see a double-digit percentage increase in 2019 despite the trade war turmoil.
Additionally, this sector is seeing increased use of cloud-based applications and AI. Companies like Veeva Systems and athenahealth’s focus on cloud-based services deserve a special mention here.
However, regulatory bottlenecks might arise. For instance, the Unique Device Identification (UDI) system by the FDA has been quite costly and difficult to implement for MedTech manufacturers.
Against this backdrop, let’s focus on a few stocks that are likely to garner solid returns owing to strong focus on their domestic businesses. We have zeroed in on three such stocks using the Zacks Stock Screener. Notably, each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, each of these stocks has outperformed the industry over the past year.
Our first pick is Amedisys, Inc. (AMED - Free Report) — a provider of home health and hospice services throughout the United States to the growing chronic, co-morbid, and aging American population.
Over the past year, the Zacks Rank #1 stock has skyrocketed 117.9% against the industry’s 13.8% decline and the S&P 500’s 7.4% fall. The company’s long-term earnings growth rate is an impressive 18.8%.
It is encouraging to note that the home health industry is poised for tremendous growth, driven by the aging U.S. population, patients’ desire for independence and home health as a cheaper care modality.
In the last reported quarter, the company recorded domestic revenues of $417.3 million, up 11.7% year over year.
Next on our list is Wright Medical Group N.V. — an orthopedics medical device company specializing in extremities and biologics products.
The Zacks Rank #2 stock has rallied 17.8% outperforming the industry’s 5% gain in a year’s time. The company’s long-term earnings growth rate is 11%.
Wright Medical’s extensive foot and ankle products portfolio and extensive training provided to extremities-dedicated surgeons have enabled it to emerge as a leading player in the foot and ankle market.
In the last reported quarter, domestic sales totaled $143.6 million, which contributed to a whopping 74% of the company’s worldwide sales. Wright Medical also enjoys significant presence in Australia and Canada.
Investors may also choose Zacks Rank #2 Surmodics, Inc. (SRDX - Free Report) — a leading provider of medical device and In Vitro Diagnostics (IVD) technologies.
Over the past year, the stock has rallied 64.6% against the industry’s 7.2% decline. The company’s long-term earnings growth rate is 10%.
Surmodics’ performance continues to be driven by its IVD unit. For over 35 years, the segment has been a leader in developing an ELISA/EIA, immunoblot/western blot, line assay or microarray.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Has the Trade Debacle Ended for US MedTech Space? 3 Picks
Trade fears were somewhat conquered when Washington and Beijing agreed to not levy further tariffs till March 2019. In fact, China is likely to levy further cuts on a wide range of imports, which includes medical diagnosis devices. That’s not all. U.S.-based companies like Varian Medical have received approval from the United States Trade Representative for the exclusion of its flagship Halcyon radiotherapy systems from Section 301 tariffs (read More: Varian Medical's Halcyon Excluded From Trade Tariffs).
Meanwhile, a report by CISION opines that the United States is the largest Medical Product market in the world, raking in more than $180 billion a year, courtesy of rising research and development activities and rising exposure to artificial intelligence (AI).
So, it would be interesting to analyze how investors can make the most of this.
What Will 2019 Offer to the MedTech Fraternity?
This year is expected to be flooded with innovation and new technologies as players from outside the sector are also likely to enter the $3.5-trillion healthcare space. Notably, tech behemoths like Amazon (AMZN - Free Report) , JPMorgan (JPM - Free Report) and Berkshire Hathaway will provide healthcare benefits to 1 million employees.
Per Moody’s Investors Service, the U.S medical device industry will be aided by earnings growth from new products and solid demand in emerging markets, which is expected to see a double-digit percentage increase in 2019 despite the trade war turmoil.
Additionally, this sector is seeing increased use of cloud-based applications and AI. Companies like Veeva Systems and athenahealth’s focus on cloud-based services deserve a special mention here.
However, regulatory bottlenecks might arise. For instance, the Unique Device Identification (UDI) system by the FDA has been quite costly and difficult to implement for MedTech manufacturers.
Against this backdrop, let’s focus on a few stocks that are likely to garner solid returns owing to strong focus on their domestic businesses. We have zeroed in on three such stocks using the Zacks Stock Screener. Notably, each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, each of these stocks has outperformed the industry over the past year.
Our first pick is Amedisys, Inc. (AMED - Free Report) — a provider of home health and hospice services throughout the United States to the growing chronic, co-morbid, and aging American population.
Over the past year, the Zacks Rank #1 stock has skyrocketed 117.9% against the industry’s 13.8% decline and the S&P 500’s 7.4% fall. The company’s long-term earnings growth rate is an impressive 18.8%.
It is encouraging to note that the home health industry is poised for tremendous growth, driven by the aging U.S. population, patients’ desire for independence and home health as a cheaper care modality.
In the last reported quarter, the company recorded domestic revenues of $417.3 million, up 11.7% year over year.
Next on our list is Wright Medical Group N.V. — an orthopedics medical device company specializing in extremities and biologics products.
The Zacks Rank #2 stock has rallied 17.8% outperforming the industry’s 5% gain in a year’s time. The company’s long-term earnings growth rate is 11%.
Wright Medical’s extensive foot and ankle products portfolio and extensive training provided to extremities-dedicated surgeons have enabled it to emerge as a leading player in the foot and ankle market.
In the last reported quarter, domestic sales totaled $143.6 million, which contributed to a whopping 74% of the company’s worldwide sales. Wright Medical also enjoys significant presence in Australia and Canada.
Investors may also choose Zacks Rank #2 Surmodics, Inc. (SRDX - Free Report) — a leading provider of medical device and In Vitro Diagnostics (IVD) technologies.
Over the past year, the stock has rallied 64.6% against the industry’s 7.2% decline. The company’s long-term earnings growth rate is 10%.
Surmodics’ performance continues to be driven by its IVD unit. For over 35 years, the segment has been a leader in developing an ELISA/EIA, immunoblot/western blot, line assay or microarray.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>