metamorworks
BTIG sees elevated stability for the medtech sector in 2024 because it strikes previous issues in regards to the affect of GLP-1 weight-loss medicine, provide chain snarls, and better rates of interest.
“With GLP-1 fears cast aside, we think MedTech is poised to have a better year in 2024 on the back of a stable-to-improving environment,” BTIG analysts wrote in a notice launched on Friday.
While the sector might not understand the expansion seen in 2023, which was helped pandemic-related pent-up demand, it ought to see enhancements in P&L and provide chain administration together with decreased headwinds from inflation and pricing. Despite this, “fears about tougher comps may be a topic for much of 1H 2024,” the analysts said.
The investment bank also sees medtech benefitting from the 2024 election cycle, noting that the sector has a tendency to perform better than the S&P heading into elections.
“We think that in this upcoming election year, MedTech may enjoy relative calm versus its healthcare peers in biotech and pharma, which are regularly targets for politically charged headlines on pricing,” BTIG analysts wrote. They added that expectations that the Federal Reserve is finished with rate hikes “may also revitalize the funding environment.”
BTIG’s top picks for 2024 are Abbott Laboratories (NYSE:ABT), Glakos (NYSE:GKOS), Zimmer Biomet (NYSE:ZBH), iRhythm Technologies (NASDAQ:IRTC) and RxSight (NASDAQ:RXST).
“We continue to view Abbott as one of the best-positioned names for 2024, whether the year ahead brings a favorable environment for MedTech stocks or another period of volatility,” wrote BTIG analysts, adding that the stock was “an attractive name whether investors are chasing growth or hunkering down.”
BTIG pointed to numerous reasons why Abbott was a top pick, including med device sales growth in the mid-teens, recovery in its nutrition business, improving margins, product launches, a “robust” balance sheet, “Dividend King status,” and the ability to act on M&A opportunities and share buybacks.
The investment firm said iRhythm, meanwhile, has several upcoming catalysts, including the potential resolution of an FDA warning letter. Coupled with an improving profit outlook and “attractive” valuation in comparison to peers, “we think IRTC can outperform in 2024.”
BTIG stated it has turn out to be extra constructive on Zimmer for 2024, viewing its valuation as “cheap,” with alternatives for “enhanced” topline development and working margin leverage together with improved adjusted EPS development.
As for Glaukos, BTIG famous that the corporate acquired FDA approval for its glaucoma treatment iDose TR sooner than anticipated, which boosted shares. But BTIG additionally thinks that the corporate’s core Micro-Invasive Glaucoma Surgery enterprise has “upside potential” and “the story gets even cleaner in fiscal year 2024 with the iDose questions out of the way.”
If the Glaukos is ready to get repeat utilization momentum for iDose, “we believe shares could rapidly appreciate,” BTIG added.
As for RxSight, BTIG famous that the shares had climbed over 200% year-to-date. But as neither Alcon (ALC) nor Johnson & Johnson (JNJ) are anticipated to have any main interocular lens product cycles subsequent yr, BTIG believes “the road just opened up for RXST to put its foot on the gas on the way to being a multi-billion dollar company.”
BTIG charges all 5 shares as buys.
SA’s present quant scores for the businesses are as follows: Zimmer Biomet, maintain; Glaukos, purchase; RxSight, robust purchase; iRhythm Techologies, maintain; Abbott Laboratories, maintain.
