Despite the negative impact to the earnings multiples of most medical device stocks during the recession, some smaller names with unique products used in non-deferrable treatments have performed well, Piper Jaffray Managing Director Thomas Gunderson said.
“It would include names like DexCom (DXCM), where they have a new continuous glucose management product for diabetics to use at home that is growing significantly,” Gunderson said. “The stock is up over 300% since early 2009.”
Volcano (VOLC), another company with solid growth, has made imaging of the heart’s arteries simpler and more cost-effective for hospitals, the analyst said. In addition, Cyberonics (CYBX) developed an implantable medical device to deal with epilepsy, a condition for which treatment is difficult to put off.
“Some medical problems are more difficult to postpone treatment,” Gunderson said. “The companies that treat these ‘non-deferrables’ have performed relatively better in the recession.”
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