With pricing, reimbursement and demand issues afflicting all medical device stocks, it may seem like no matter where one looks, investment opportunity in this sector is hard to find. However, Piper Jaffray Managing Director and Senior Analyst Mike Miksic sees three distinct buckets of opportunity among the medtech companies he covers.
“The first and maybe the bucket with the most perceived risk around it are device stocks that we like and that we think are going to persevere through this period and are executing well, even though they’re holed up in a challenging neighborhood at the moment, if you will,” said Miksic, who includes NuVasive (NUVA) and Wright Medical (WMGI) as two companies that would fall in this first group.
“The second bucket includes stocks that are less correlated to device volumes and on the margin more tied to hospital equipment and capital investments. What we have seen is that capital spending among hospitals, reinvestment in instruments and equipment, has actually been recovering at a steady pace, and new hospital construction is starting up again,” said Miksic, citing Hill-Rom (HRC) and MAKO Surgical (MAKO) as two examples.
“In the third bucket are diversified health care providers, pure and simple, large, mature businesses that we see to some degree as favorable safe havens for investors.”
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