While technology has been the engine that has driven stock market performance for some time now, increasingly we are seeing a seismic shift to health care among many portfolio managers, and with good reason. Health care spending has grown for years, and with an aging population that is actually living longer, more and more procedures that may have been postponed in the past are being completed now.
A new component for the industry is the big increase in working from home, and this is helping to fuel growth for some of the top medical technology companies. In a new Jefferies research report from, the firm’s lead health care analyst, Jared Holz, makes the case that working from home could be a huge boost for the industry in the near term and into 2021 and beyond. The report said this:
With more of the U.S. population now able to be remote, at least more often than before, potential patients find themselves in a much better spot logistically to have treatments. Jared does not believe everyone will be better off, but does think minimally invasive surgery will inflect higher as Americans are able to recover from within the confines of their homes without the pressure to rush back to work (a physical location). Eliminating this hurdle from the equation may be significant and the Medtech Companies are already seeing their businesses 70-80% of the way back to what would be considered to be “normal” or base levels. If he is correct in his thesis, once flat growth is achieved, there will be further upside to numbers as psychology continues to shift.
Nine stocks are listed as potentially benefiting from the paradigm shift. Here we picked five with outstanding growth prospects and potential catalysts. While all are rated Outperform at Jefferies, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This is one of the top pharmaceutical stock picks across Wall Street, and the Allergan acquisition is a huge positive. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.
One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so last June it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of this year.
AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.
Shareholders receive a 5.42% dividend. Jefferies has a $107 price target for the shares, but the Wall Street consensus target is $109.12. AbbVie stock closed trading on Friday at $86.12.
This top medical technology company’s stock has remained on a slow and steady grind higher over the past five years. Boston Scientific Corp. (NYSE: BSX) develops, manufactures and markets medical devices that are used in interventional cardiology, peripheral interventions, vascular surgery, electrophysiology, neurovascular interventional, oncology, endoscopy, urology, gynecology and neuromodulation.
The company recently announced it has initiated a controlled launch of the ACURATE neo2 Aortic Valve System in Europe. This next-generation transcatheter aortic valve implantation technology is a new platform designed with a number of features to improve upon the clinical performance of the original ACURATE neo platform. Compared to the previous generation device, the ACURATE neo2 valve system also has an expanded indication for patients with aortic stenosis (with no specified age or risk level) who are considered appropriate candidates for the therapy by their heart team, including a cardiac surgeon.
The Jefferies price target of $46 is in line with the $46.29 consensus target. Boston Scientific stock closed Friday at $38.48.