Healthcare Business

Trump Corporate Tax Cuts Could Really Help These 4 Large Cap Companies

One thing economic pundits have always talked about, regardless of which party held the reins of power, was the stifling U.S. corporate tax rate, which is among the highest in the world. President-elect Trump and House Republicans led by Speaker Paul Ryan both have plans to lower that rate and also allow a lower tax rate on cash large corporations hold overseas.

A new research report from JPMorgan makes the case that lowering the corporate tax rate could be huge for many large cap companies, and it points to five leading medical technology stocks that the firm believes could really benefit. Noted in their report:

Companies that would benefit the most from a lower US corporate tax rate tend to: (1) be earlier in their development cycle, (2) have a higher percentage of both their sales and profits in the US; or (3) they’ve yet to take advantage of some of the opportunities presented by more aggressive, long-term tax planning – be it around intellectual property, manufacturing, or transfer pricing.

Of the stocks JPMorgan thinks could see a large benefit, these are the four highest profile companies, which in addition are suitable for more aggressive growth portfolios.

Baxter International

This company has hit our insider buying screens over the past year. Baxter International Inc. (NYSE: BAX) provides a portfolio of renal and hospital products. Its Renal segment provides products and services to treat end-stage renal disease, irreversible kidney failure and acute kidney therapies. This segment offers a comprehensive portfolio to meet the needs of patients across the treatment continuum, including technologies and therapies for peritoneal dialysis, in-center hemodialysis (HD), home HD, continuous renal replacement therapy and additional dialysis services.

The Hospital Products segment manufactures intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, infusion pumps, inhalation anesthetics and biosurgery products. This segment also provides products and services related to pharmacy compounding, drug formulation and packaging technologies.

Its shareholders are paid a 1.16% dividend. The Wall Street consensus price objective for the stock is $53.25. Baxter shares ended trading yesterday at $46.07 a share.

Edwards Lifesciences

This company pioneered the artificial heart valve, and it could be poised for big growth. Edwards Lifesciences Corp. (NYSE: EW) provides products and technologies to treat structural heart disease and critically ill patients worldwide. The company offers transcatheter heart valve therapy products, comprising transcatheter aortic heart valves and their delivery systems for the nonsurgical replacement of heart valves.

The company also provides surgical heart valve therapy products, such as pericardial valves for aortic and mitral replacement, and minimally invasive aortic heart valve system, as well as tissue heart valves and repair products, which are used to replace or repair a patient’s diseased or defective heart valve.

Top Wall Street analysts feel that the company’s acquisition of privately held CardiAQ earlier this year made good sense going forward. CardiAQ has human implants of transcatheter mitrial valves, and Edwards is focused on the mitrial valve opportunity after its very strong success in aortic valves. The company also has had tremendous success with transcatheter valve replacement. Transcatheter heart valve replacements are rapidly gaining favor in the medical community for use in those patients who are deemed unsuited for open heart surgery, and they are a fast growing revenue stream for the company.

The stock was hit hard recently and may be offering investors an attractive entry point. The consensus price target for the shares is $122.10. The stock closed Tuesday’s trading at $88.91 apiece.