Markets all over the world have been grappling with persisting economic turmoil since coronavirus broke out. However, a few fiscal aid packages and drop in unemployment rate have brought temporary respite. Per CNBC.com, U.S. unemployment rate plummeted to 11.1% in June.
This sudden spurt of recovery in markets has been reflected in the recent uptrend of benchmark indices. Over the past month, Nasdaq has seen an upswing of 5.34%. Similarly, Dow Jones has seen a rise of 2.51% in this period with 4% growth over the past five days. The S&P 500 index has also climbed 3.22% over the past month with 2.02% growth over the past five days.
A Glimpse Into MedTech Space
Due to global manufacturing and supply chain disruptions as well as deferral of elective medical/surgical procedures, the MedTech industry has been one of the hardest hit by the pandemic. Several MedTech firms, particularly in the dental equipment supply and surgical domains, not only reported drastic revenue losses in the first quarter of 2020 but are expected to have faced the same in the second quarter as well.
However, the ongoing market momentum coupled with rising optimism over steady economic revival has pumped up this sector’s performance over the past month. Added to this, we note that despite growth being deterred for several MedTech sectors, COVID-19 has been a boon for a quite a few.
Digital health management, diagnostics and robotics-assisted surgery are some of those specific MedTech sectors which are flourishing on the back of a number of positive developments.
Increased consumer adoption of telemedicine and remote patient monitoring tools has aided digital health stocks amid the pandemic. In this regard, telemedicine company TelaDoc Health TDOC and digital diabetes company Tandem Diabetes Care TNDM deserve a mention.
The FDA’s EUA receipts of several recently-launched COVID diagnostic tests have driven the share price of several biotech players like LabCorp LH. Also, Accuray Incorporated ARAY has been gaining traction on the fully-robotic CyberKnife platform.
Each of the stocks mentioned above are rallying and are outperforming their respective industries currently.
Ideal Strategy to Follow Now
During market turbulence, it’s always difficult to predict whether the current market uphill or downhill will continue for long. Under such situations, it has always been seen that MedTech stocks with big market cap have proved their mettle in a more efficient way in running their businesses compared to smaller stocks in this space. These stocks mostly hold good long-term growth potential. Interestingly, prices of many of such stocks have declined of late due to the ongoing widespread panic-selling, making them affordable buys.
3 Stocks to Bet On:
The following are a few MedTech companies with market cap of more than $1 billion and Growth Score of A or B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
Backed by an upward trend of share prices and projections of robust earnings growth rates, these stocks are ideal for long-term bet.
ResMed Inc. RMD: In May 2020, this Zacks Rank #2 company unveiled cloud-based remote monitoring software for ventilators and Lumis bilevel devices across Europe, via its AirView platform.It has been ramping up production of ventilators, masks and other respiratory devices since March, banking on a solid surge in demand for its critical care products during the first quarter. The company has a Growth Score of A and a market cap of $28.33 billion.
For the fiscal 2020, earnings growth rate is anticipated at 23.1%, which is favorable compared to the industry’s 1.1%.Over the past three months, the company’s shares have outperformed the industry. The stock has gained 19.2% compared with the industry’s 0.7% growth.
West Pharmaceutical Services, Inc. WST: This Zacks Rank #2 company recently expanded its product portfolio with the launch of two AccelTRA component line extensions; a Flip-Off Seal container closure system (CCS) compatible with the 5mL Daikyo Crystal Zenith vial; and the new Ready Pack system with SCHOTT’s adaptiQ platform, which was a result of the company’s recent partnership expansion with the famed packaging supplier.It has a Growth Score of A and a market cap of $17.69 billion.
For the next five years, its projected EPS growth stands at a solid 9.2% compared with the industry’s anticipation of growth 8.5%. Over the past three months, the stock has gained 41% compared with the industry’s 14.1% growth.
Patterson Companies, Inc. PDCO: This Zacks Rank #1 company’s growth is being driven by a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships. High single-digit growth in its global companion animal business drove the topline in the last-reported quarter. It has a Growth Score of B and a market cap of $2.37 billion.
For fiscal 2022, earnings growth rate is anticipated at 24.4% against the S&P 500 Index’s (2.1%).Over the past three months, the company’s shares have outperformed the industry. The stock has gained 59% compared with the industry’s 14.1% growth.
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