6 MedTech Stocks Set To Crush The Market In 2018
Zacks Investment Research | Dec 20, 2017 12:30AM ET
“America has the best doctors, the best nurses, the best hospitals, the best medical technology, the best medical breakthrough medicines in the world.” – Rep. Bill Frist
In terms of market size, the U.S. health care market is the largest in the world. A report by Health Access suggests that America’s unparalleled purchasing power, massive demand for medical services and equipment, and opportunity for innovation has lent it a competitive edge.
Further, the markets got a boost after President Donald Trump — an ardent proponent of “living big, living large” — came into power. His constant efforts to boost American lifestyle, focus on middle class and incorporate the best health care in America have been creating a stir.
Trump’s efforts to eliminate the country’s jobless stature are remarkable. Per reports, the U.S. unemployment rate was pegged at 4.1% in November, the lowest since February 2001. Undoubtedly, Trump’s “America first!” pitch has been driving employment growth like never before.
Four Factors to Drive MedTech in 2018
Increasing Consolidation in Healthcare
The latest trend of increasing consolidation in the healthcare space has led to a reduction in the number of players, greater market concentration and reduced competition as well as increasing barriers of entry in the industry. The companies will benefit from higher market cap, which will put them in a position to negotiate with suppliers and consumers.
The recent $69-billion deal between Aetna Inc. (NYSE:AET) and CVS Health (NYSE:CVS) is a significant example. It qualifies as vertical integration, which will enable the newly formed entity to sell a range of services and products from drug to insurance cover.
President Trump’s Focus on Emerging Markets
Per a recent BCG report, the share of emerging market revenues, which is less than a quarter of MedTech’s global revenues, is likely to increase to nearly one-third by 2022.Thus, the United States' trade plans with emerging countries are likely to favor the domestic companies.
In this regard, investors may find President Trump’s 12-day Asia trip last month interesting. The visit was aimed at boosting inter-country trade relations, particularly with the emerging nations. Trump’s promise to augment bilateral trade agreements with Indo-Pacific nations instills our confidence in his APAC policies. He also emphasized “free and open Indo-Pacific trade” with a focus on the nations of Japan, Australia and India.
IVD & PBM Markets to Thrive
A research report by EvaluateMedTech World Preview indicates that global MedTech sales are expected to witness a CAGR of 5.1% to $522 billion by 2022, with IVD (in Vitro diagnosis) raking in annual sales of $69.6 billion at a CAGR of 5.9%. Increasing investments from government and private players in the form of reimbursement coverage and speedy patent approvals are driving demand.
The role of pharmacy benefit managers (PBM) in the U.S. healthcare sector has been evolving. PBMs manage pharmaceutical spending and enhance health benefits for end users. Per a report by Market Research Reports.biz, the global PBM market will see a CAGR of 7.16% between 2014 and 2019. Investing in PBM stocks can be a prudent move for registering solid gains in 2018. Looking for the Best Stocks for 2018? Be among the first to see our Chemed Corp. Quote
Get The News You Want
athenahealth Inc ( (NASDAQ:ATHN) ): The stock flaunts a Zacks Rank #1 and a Growth Score of B. The Zacks Consensus Estimate for athenahealth’s sales is pegged at $1.36 billion for 2018, signifying growth of 11.7% on a year-over-year basis. The stock has a market cap of $5.35 billion and a long-term expected earnings growth rate of 22.3% at the moment.
athenahealth’s strong product portfolio, solid network expansion strategies and unique business model are key tailwinds. athenahealth’s portfolio comprises a wide array of products that include electronic health records, revenue cycle management, medical billing, patient engagement, care coordination, population health management and Epocrates. Notably, the company launched athenaInsight, an online news hub reporting on U.S. healthcare activities and trends of healthcare providers and “de-identified patients.”
athenahealth, Inc. Price and Consensus
Align Technology Inc. ( (NASDAQ:ALGN) ): The stock has a Zacks Rank #1 and a Growth score of B. The Zacks Consensus Estimate for Align Technology’s sales is pegged at $1.79 billion for next year, signifying growth of 23.5% on a year-over-year basis in 2018. The stock has a market cap of $18.75 billion and a long-term expected earnings growth rate of 28.9% now.
Align Technology’s consistent efforts to boost product development, balanced growth across all channels and the focus in international markets bolster our confidence in the stock. We are encouraged by the company’s strong InvisAlign Technology prospects and growth in North America and international regions. We are also upbeat about the company signing of a distribution agreement with Patterson Companies (NASDAQ:PDCO) recently.
Align Technology, Inc. Price and Consensus
IDEXX Laboratories, Inc.( (NASDAQ:IDXX) ): The stock has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for IDEXX Laboratories’ sales pegs at $2.16 billion for the next year, reflecting growth of 10.7% on a year-over-year basis. The stock has a market cap of $18.75 billion and a long-term expected earnings growth rate of 20.4%.
IDEXX Laboratories continues to depict solid growth globally on strong international expansion. Management’s innovation-based global strategy is leading to CAG Diagnostics growth. Notably, IDEXX widened cloud technology portfolio by adding rVetLink. Solid organic revenue growth along with a raised guidance for 2017 buoy optimism.
IDEXX Laboratories, Inc. Price and Consensus
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