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3 MedTech Stocks Likely to Have Braved Coronavirus Blow in Q1

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Sriparna Ghosal
·6 min read
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As the chaos around the coronavirus pandemic is not showing any signs of subsiding, the global stock market continues to grapple with the economic crisis brought on by it.  Most U.S. companies across various industry domains are expected to have faced huge revenue losses in the first quarter.

However, the impact of the virus is expected to peak in the second quarter. Given the gravity of the situation, companies who have released their first-quarter results have been widely seen to slash or even suspend their guidance for the full year.

In this regard, we note that, per a report by Fitch Ratings, the world economy is expected to decline 1.9% in 2020, with the U.S., eurozone and U.K. GDP likely to decline3.3%, 4.2% and 3.9%, respectively.

Government Initiatives and Industry Trends in Q1

Meanwhile, as a response to the public health crisis, the U.S. government declared a public health emergency earlier this year and authorized the emergency use of IVD tests for the diagnosis of COVID-19. Authorizations for emergency PPE and emergency ventilator and ventilator substitutes followed eventually.

In February, the FDA made a flexible decision to allow certain certified laboratories to urgently begin developing validated coronavirus diagnostics, subject to certain conditions.

Nonetheless, the MedTech industry remains one of the sectors hit hardest by the pandemic.This is largely a result of the worldwide manufacturing coming to a shuddering halt and the supply chain getting disrupted.

 

Apart from a few sectors within MedTech which are working on coronavirus-related treatment/research/and or health support, the rest are expected to have put up a dull performance on lower product demand during the first quarter.

Coming to Abbott’s ABT first-quarter results released on Apr 16, core Laboratory Diagnostics sales declined on an organic basis owing to lower routine testing volumes due to the outbreak. However, Molecular Diagnostics, Rapid Diagnostics and Point of Care Diagnostics segments registered revenue growth on an organic basis during the first quarter. This can be attributed to the launch of two COVID-19 tests in March — the ID NOW COVID-19 molecular test (the fastest available molecular point-of-care test delivering results within 13 minutes and positive results in five minutes) and the RealTime SARS-CoV-2 molecular test, which runs on Abbott's m2000 RealTime System located in hospitals and reference laboratories.

Boston Scientific BSX, in the meanwhile, projects a preliminary $10 million to $40-million potential headwind to first-quarter 2020 revenues as a result of deferred procedures and supply chain disruptions.

MedTech Companies That  Are Thriving Amid the Pandemic 

Despite the widespread crisis, there are several MedTech companies which are expected to have gained in the first quarter. The expectations are primarily backed by the unforeseen rise in demand among consumers and the healthcare sector for face masks, protective gear, ventilators and other equipment. Also, several companies have been gaining on the launch and FDA Emergency use Authorization (EUA) of their newly-developed COVID-19 tests.

3 Stocks Likely to Have Gained in Q1

Let’s take a look at three companies which are likely to have performed well in the first quarter.You can see the complete list of today’s Zacks #1 Rank(Strong Buy) stocks here.

DexCom DXCM: In February, this Zacks Rank #2 (Buy) company signed a global commercialization deal with Insulet Corporation PODD to combine current and future Dexcom continuous glucose monitoring systems (CGM) with the latter’s trusted tubeless insulin delivery Pod into the Omnipod Horizon System for automated insulin delivery, currently in pivotal trial. This development should reflect positively in the company’s first-quarter performance.

In the past three months, the company’s shares have outperformed the industry. The stock has rallied 32.7% against the industry’s 10.4% decline. The Zacks Consensus Estimate for the company’s first-quarter 2020 revenues is pegged at $356.5 million, suggesting a 27.1% rise from the year-ago number. The quarter’s adjusted earnings estimate is pegged at 10 cents per share, which indicates a 300% surge from year-ago number. The company’s first quarter earnings are slated for release on Apr 28.

McKesson MCK: This Zacks Rank #3 (Hold) company’s Biologics business, which is an independent specialty pharmacy for oncology and other rare and complex therapeutic areas, was selected in March by AkaRx, Inc., a subsidiary of Dova Pharmaceuticals, Inc., as a specialty pharmacy provider in a limited distribution network for DOPTELET (avatrombopag).In January, Biologics was also selected by Blueprint Medicines Corporation as a specialty pharmacy provider for AYVAKIT (avapritinib) for the treatment of patients suffering from metastatic gastrointestinal stromal tumor (GIST).  These developments are expected to have contributed to the company’s topline during the fourth quarter of fiscal 2020.

In the past three months, the company’s shares have outperformed the industry. The stock has lost 11.7% compared with the industry’s 15.2% decline. The Zacks Consensus Estimate for the company’s fourth-quarter  fiscal 2020 revenues is pegged at $55.60 billion, suggesting a 6.1% rise from the year-ago reported number.The same for earnings is pegged at $4.10 per share, suggesting an 11.1% rise from the year-ago reported number.The company’s fourth-quarter earnings are expected to release on May 13.

Luminex LMNX: This Zacks Rank #3  company recently announced the receipt of EUA from the FDA for its NxTAG CoV Extended Panel, which would enable it to swiftly detect the SARS-Cov-2 virus. In February, the company announced the submission of an application to the FDA for 510(k) clearance of the VERIGENE II Respiratory Flex Assay, which is the second VERIGENE II assay to be submitted to the federal agency.

In the past three months, the company’s shares have outperformed the industry. The stock has gained 35.8% against the industry’s 10.4% decline. The Zacks Consensus Estimate for the company’s first-quarter 2020 adjusted loss is pegged at 2 cents per share, which suggests an improvement of 71.4% from the year-ago number. The company’s first-quarter earnings are slated to release on May 11.

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Luminex Corporation (LMNX) : Free Stock Analysis Report
 
McKesson Corporation (MCK) : Free Stock Analysis Report
 
DexCom, Inc. (DXCM) : Free Stock Analysis Report
 
Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Boston Scientific Corporation (BSX) : Free Stock Analysis Report
 
Insulet Corporation (PODD) : Free Stock Analysis Report
 
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