5 Medtech Stocks To Steer Clear Of Amid Political Chaos
Zacks Investment Research | Sep 18, 2017 09:35PM ET
Since the change in political power in the United States, it has been quite a tumultuous phase for MedTech. Things started getting dramatic since President Trump started forging ahead with his plans to repeal Obamacare. After a series of futile attempts, the Republicans resorted to a “skinny repeal” of Obamacare which failed as well.
Political Uncertainty Hits MedTech
Not willing to give up, the Republicans are back with the latest Graham-Cassidy bill targeting the termination of the Obamacare Act and focusing on reduced federal spending on healthcare. The Trump administration is not leaving any stone unturned to garner support for the latest GOP bill.
Moreover, the industry is looking forward to end the unpopular Cadillac tax (40% excise tax on high-cost healthcare plans). Also, there is high possibility that the Medical Device fraternity will be exempt from the 2.3% medical device tax. In this regard, the Trump administration has successfully delayed the Cadillac tax till 2026.
MedTech Grapples With Regulatory Changes
Many economists believe that changes in MedTech-related regulations might escalate the regulatory burden. The recent regulatory changes include Trump’s signing of the FDA Reauthorization Act (FDARA) into law whereby the bill extends through fiscal 2022 and revises FDA user fees for medical devices. Complicating the situation, the Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule whereby beginning October, it intends to cut more than $43 billion over a period of 10 years to Medicaid disproportionate share hospital (“DSH”) allotments.
Some MedTech players in Capitol Hill are concerned about the rising regulatory burdens which might result in declining research and development spending. This might further impede innovation rates in the MedTech space.
They also believe that the regulatory pressure is also weakening the barriers to entry in the MedTech space, thereby paving the way for increased competition in the core markets.
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Mesa Laboratories, Inc. (NASDAQ:MLAB) : Headquartered in Lakewood, CO, Mesa Laboratories designs, manufactures, and commercializes disposable products and quality control instruments. The company presently carries a Zacks Rank #5 and has a VGM Score of D.
Further, the Zacks Consensus Estimate for 2017 earnings has moved 7.6% down over the last 60 days, with downward revision by one analyst.
Moreover, the stock has gained 19.2% year to date underperforming the broader industry ’s 22.1% gain.
Biocept, Inc. (NASDAQ:BIOC) :Headquartered in San Diego, CA, Biocept is an early stage molecular oncology diagnostics company, which develops and markets proprietary circulating tumor cell (CTC) and circulating tumor DNA assays using a standard blood sample. The company presently carries a Zacks Rank #4 and has a VGM Score of D.
Further, the Zacks Consensus Estimate for fourth-quarter 2017 loss per share has widened 5% over the last 60 days with a downward revision by an analyst.
Moreover, over the last six months the stock has lost 40.7% in contrast to the broader industry ’s gain of 5.9%.
Oxford Immunotec Global PLC (NASDAQ:OXFD) : Headquartered in Abingdon, U.K., Oxford Immunotec is a diagnostics company focusing on developing and marketing proprietary tests for immune-regulated conditions. The company presently carries a Zacks Rank #4 and has a VGM Score of D.
Further, the Zacks Consensus Estimate for 2017 loss per share has widened 47.2% over the last 60 days, with two estimates moving south.
Moreover, over the last six months the stock has gained only 0.1% underperforming the broader industry ’s gain of 10.4%.
T2 Biosystems, Inc. (NASDAQ:TTOO) : Headquartered in Lexington, MA, T2 Biosystems is an in vitro diagnostics company, developing diagnostic products and product candidates in the United States. The company presently carries a Zacks Rank #4 and has a VGM Score of D.
Further, the Zacks Consensus Estimate for 2017 loss per share has widened 11.4% over the last 90 days.
Moreover, over the last year the stock has lost 29.9% in contrast to the broader industry ’s 8% gain.
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