When the market is expensive and overbought like the current one is, it is very important to stay with companies that not only have solid earnings potential but also have upcoming catalysts that can help move the shares higher. One space that could be primed for positive news and developments is medical technology, and for growth investors with a long-term horizon, there is some outstanding value to be found.
A new BofA Securities research report zeroes in on four companies the firm feels have some very positive upcoming catalysts that should surface in the next three to six months. The report said this:
Exiting fourth quarter calls we are highlighting our best ideas / key learnings. We have two main calls. Four companies have potential meaningful catalysts coming over the next 3-6 months. Second, In March and April we are highly likely to see a real recovery in surgical procedure volumes but procedure based medtech names continue to trade at 10 year relative valuation lows. Our core call on the group therefore remains the same – Reiterate our Buy rating on discounted procedure based medtech.
While all four stocks are rated Buy at BofA Securities, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This stock is more off the radar but offers an outstanding entry point. Axonics Modulation Technologies Inc. (NASDAQ: AXNX) has developed a rechargeable sacral neuromodulation (SNM) system that treats patients with overactive bladder, fecal incontinence or urinary retention by delivering mild electrical pulses to the sacral nerve to restore normal communication to and from the brain. The company’s r-SNM system is the only rechargeable SNM device, is 60% smaller than the device offered by its only competitor and only needs to be replaced every 15 years.
BofA Securities noted this about the company:
We attended (virtually) the SUFU meeting last weekend where doctors discussed the company’s new Bulkamid technology. Feedback was outstanding. We see as much as 15-20% upside risk to consensus numbers in 2021 and 2022. Hence Axonics has both 15-20% upside to numbers and also could see a 3-5 point increase in its forward multiple this year in our view.
The firm’s price target for the shares is $65, and the Wall Street consensus target is right in line at $65.33. The shares closed on Wednesday at $56.45 a share, which was up almost 4% into a very bad tape.
This top health care company is a solid and safe play now. Becton Dickinson and Co. (NYSE: BDX) is a diversified global medical technology company that produces medical devices, instrument systems and reagents for the health care, life sciences research, clinical, diagnostic and pharmaceutical markets.