Via [Moneyofficials] – To hunt for top medical stocks in 2017 is not an easy job for two reasons. First, a few successful years have led to medical companies being prized in advance. But a not so stellar 2016 brought a certain change in this optimistic mood. Second, in the coming months, the political volatility associated with the revision of rules of the game in this market will continue. The cancellation (and/or replacement) of the ACA by the new US administration can send ripples on a global scale. The likely cancellation of the 2.3% excise tax on medical device alone is going to lead to bigger investments into research and development. Therefore, there are high hopes for good outcome to the industry, and so increased earnings and higher revenues.
It’s certain that medical companies will remain a good option for those who prefer reliable growth. Their stocks will continue to rise so long as the economy itself is growing. As for the stellar discoveries, they should be sought in particular areas, above all among med-tech companies. Recent trends show prospects for stocks that are engaged in diagnostic equipment and techniques, as well as those whose business is at the intersection of medicine and information technology, where the moment of synergetic merger is approaching.
This Toronto-based company was founded in 2013 and went public one year later. ChroMedX makes tools for the almost untapped market of POCT, the point of care medical testing, and have all the means to be the first who will have made everything optimally. Its major product is the HemoPalm handheld blood analyzer, which, under favorable circumstances, can get into every lab coat and every ambulance around the world. The device is cleverly constructed, it performs medical tests with a test quality that correspond to “large” laboratory analyzers. Its working principle also inspires good expectations: it works with disposable cartridges, which are processed in an analyzer the size of a scanner for credit cards. This is a classic razor and blades business model.
The handheld is now at the stage of final hardware refinement. Ash Kaushal, acting president and CEO of ChroMedX announces the engagement of rapid prototyping firm, Agile Manufacturing, to complete the final assembly and packaging of the HemoPalm analyzer prototype. The product should arrive later in 2017, so during next few months this stock is a very strong buy.
The company specializes in devices for spinal surgery to provide procedurally integrated solutions that are minimally disruptive. While the field is potentially hugely lucrative, the approach of the management is not always reassuring. Its Q1 financial report almost matched expectations and there are many new product launches announced this year. Adjusted gross margin fell nearly two percentage points to 75.3%, but this is mainly a consequence of the recent takeover of the Biotronic NeuroNetwork.
NuVasive plans to launch many new products this year, including LessRay image enhancement platform designed for radiation reduction, RELINE Trauma system, expandable cages and UNYTE system for complex fractures. Ambitious plans were supported by greater borrowing capacity after the company raised its line of credit to $500 million. However, the interest expense rose as well to $9.8 million this quarter.
Stryker is into its 10th year of revenue growth, uninterrupted, so it’s not about the totally unexpected performance but rather the stock that shows consistency. The company has three healthcare areas it is active in: orthopedics, surgical equipment, as well as advanced brain and spine surgery. In 2016 it closed two massive acquisitions: Sage Products (disposable supply for intensive care) and Physio-Control International, which manufactures defibrillators. Stryker recently announced another takeover of Cactus LLC, a manufacturer of controlled substance waste management systems. It’s important for the sprawling company due to the quality of its acquisitions. One example of a strategic approach in this direction is the MAKO robotic tools, acquired with their manufacturer, MAKO Surgical Corporation, in 2013. It is considered a pioneer in the development of robotic-assisted surgery in orthopedics.
The stock has strong potential, but a high degree of diversification implies other indicators to watch. It’s rather about the general condition of the med-tech market, as well as implementing the growth strategy in foreign markets, including emerging ones.
The Q1 performance of this stock was quite stellar (+44%), while quarterly results turned to be underwhelming because DexCom missed on revenues. This San Diego-based company is the leader in continuous glucose monitoring technology which is used by diabetics. Its stock was under siege as the rival Medtronic giant get approval for a similar device. Thus, good conditions to buy shares at a good price. DexCom is eager to continue to focus on its core product. The company is on the path to introduce a glucose-monitoring sensor of the next generation that can avoid the need to get a finger sticks to calibrate the monitor for a patient.
The company also successfully diversifies its sales markets. Days earlier it’s announced that the Dexcom’s G5 Mobile CGM System can now be used with Apple Watches throughout Europe. On the downside, the integration with smartphones seems under constant pressure due to rumors that Apple conducts its own developments of sensors to monitor blood sugar levels.
Not so much a discovery, but this med-tech giant is certainly a stock to watch. It was all over the news during the spectacular sell-off, but its strong earnings base and very diversified sales make it a buying opportunity. Recently announced product line expansions is also an upside.
Medtronic sales were impacted by replacement sales of its defibrillators and insulin pumps. Also, there are several legal and regulatory issues which pose short-term risks. But none of them are severe enough to worry about.
If you are looking for a big and stable company that is currently struggling with headwinds but has the potential for long-term growth, Medtronic may be exactly what you are looking for. It certainly has been able to show reassuring earnings growth of at least 8% during the current fiscal year.