The ongoing coronavirus pandemic has already impacted the world economy on an unprecedented scale. Per a Fitch Ratings report, the world economy is expected to see a decline of 1.9% in 2020 with the United States, Eurozone and U.K. GDP slipping 3.3%, 4.2% and 3.9%, respectively.
According to Dallas Federal Reserve President Robert Kaplan, the U.S. economy will witness a historic contraction in the second quarter, while unemployment rate will remain high at the end of 2020. Per Kaplan’s projection, the gross domestic product will decline at an annualized rate of 35-40% in the second quarter and is expected to recover in the second half of the year.
Market Volatility to Persist
The pandemic is not yet done wreaking havoc on the global economy. The U.S. stocks suffered their worst one-day sell-off in three months on Jun 11 as growing concerns about a second wave of coronavirus cases took hold. The Dow Jones was down 1,800 points or 6.9% at close, while the S&P 500 and Nasdaq fell 5.9% and 5.3%, respectively. The downturn came following the Fed’s decision to keep interest rates near zero for now. Notably, the target range currently sits at 0% to 0.25%.
However, the stock market witnessed a rebound on Monday afternoon after the Fed announced its plan to buy individual corporate bonds, which buoyed investor sentiments.
This pandemic-triggered roller-coaster scenario has resulted in numerous sell-offs with investors scurrying for MedTech stocks that effectively countered the same. It will be prudent for those interested in such stocks to capitalize on the scenario by investing in two spaces — Diabetes Management and Ventilators.
Sectors with Lucrative Prospects
Notably, diabetes management has been flourishing despite the pandemic-induced widespread manufacturing and supply-chain disruption. This can be primarily attributed to a rapid shift in consumer interests toward the adoption of telehealth and remote-monitoring tools amid the pandemic-induced lockdown. Also, diabetes patients are highly susceptible to contracting the coronavirus. Hence, the digital diabetes treatment options have been witnessing a surge in demand during these challenging times.
For instance, in May 2020, Medtronic plc MDT announced the receipt of the FDA’s approval for the Android version of its Guardian Connect continuous glucose monitoring (CGM) system.
Coming to the ventilator space, companies involved in the production of ventilators seem to have survived the steep fall in stock prices. Further, FDA’s relaxation of policy guidelines related to the production of ventilators has provided a substantial boost to this space.
With the rising demand for ventilators globally, the Department of Health and Human Services spent nearly $3 billion to encourage U.S. manufacturers to ramp up production at an unprecedented pace. Few companies scaled up production to meet the increased demand for critical care products amid the pandemic.
Stocks to Watch
Given the aforementioned discussion, investors might want to take a look at the following stocks that have been displaying remarkable strength amid such market volatility and turmoil.
Abbott Laboratories ABT has been making significant strides in the wake of the coronavirus outbreak. In April 2020, this global major attained Health Canada authorization to use FreeStyle Libre system — the world's leading sensor-based glucose monitoring technology — in hospital settings during the coronavirus outbreak. This enabled frontline COVID-19 healthcare workers to remotely monitor patients' glucose status and glucose history.
In the past year, the Zacks Rank #3 (Hold) stock has gained 7.7% against the industry’s decline of 6.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DexCom, Inc. DXCM, a medical device company focused on the design, development and commercialization of continuous glucose monitoring systems (CGM). In June 2020, management announced that the Dexcom G6 CGM System obtained the CE Mark across Europe for providing patients with an option to attach the device to the back of their upper arm, leading to comfortable wearing. In April, the FDA allowed the use of DexCom CGM in hospital setting and at other healthcare facilities to lend support to COVID-19-related efforts. This, in turn, bolstered demand for the product further.
The Zacks Rank #2 (Buy) stock has gained 157.9% in a year’s time, compared with the industry’s growth of 1.6%.
ResMed Inc. RMD has been ramping up production of ventilators, masks and other respiratory devices since March, driven by a significant surge in demand for its critical care products in the first quarter. The company produced more than 52,000 non-invasive ventilators, including bilevels and invasive ones. Per the company, this marked a three-fold increase in production from the year-ago period, thus boosting its first-quarter results across geographies. The company recently launched cloud-based remote monitoring software for ventilators and Lumis bilevel devices across Europe via its AirView platform.
In the past year, the stock has gained 41.5% against the industry’s decline of 6.3%. It carries a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Medtronic PLC (MDT) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
ResMed Inc. (RMD) : Free Stock Analysis Report
Abbott Laboratories (ABT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research