For Immediate Release
Chicago, IL – June 29, 2018 – Zacks Equity Research highlights Polaris Industries PII as the Bull of the Day and BlackRock Capital BKCC as the Bear of the Day. In addition, Zacks Equity Research provides analysis onIntuitive Surgical, Inc. ISRG, Medtronic plc MDT and NuVasive, Inc. NUVA.
Here is a synopsis of all four stocks:
Bull of the Day:
Recent headlines have highlighted the issues some American companies are having with recent tariffs imposed on imports and the retaliatory tariffs imposed by our trading partners on goods exported from the U.S. to other markets.
Harley Davidsonhas been specifically singled out by President Trump for its decision to shift some manufacturing overseas in order to sell its motorcycles to European markets while avoiding approximately $2,200 per vehicle in tariffs.
While sales of motorcycles and other recreational equipment are on the rise in the U.S. thanks to a strong economy and record-low unemployment, manufacturers who have the smallest reliance on imported raw materials or sales outside the country will be in an advantaged position to continue to operate normally with minimal regard for tariffs and could even gain market share and/or pricing power versus imported products.
Polaris Industriesmanufactures and sells Powersports equipment primarily in the U.S. including Motorcycles, Off Road ATVs, Snowmobiles and a wide range of parts and accessories. Through its brands Polaris, Ranger RZR and Indian motorcycles, Polaris is far and away the leader in sales of Powersports equipment in North America.
It’s worth noting that Indian Motorcycles – a revival of an iconic American brand produced from 1901 to 1953 – makes large V-Twin road cycles that compete directly with Harley Davidson’s products.
Polaris operates 16 In-House manufacturing facilities worldwide, 10 of which are in the U.S., as well as 1 in Mexico, 3 in France, 1 in Poland and 1 in China. In the current environment, managers of public companies have a difficult job weighing the cost benefits of manufacturing overseas, while minimizing the negative effects of taxes and tariffs – and now, apparently even avoiding the ire of the President.
Polaris recently opened a new manufacturing plant in Alabama and announced plans for a new distribution center in Nevada.
Their diverse manufacturing footprint allows Polaris to continue producing good for the U.S. in the U.S., while serving while serving markets abroad – which are growing at an annual rate of 27% - with goods manufactured in jurisdictions which minimize tariffs.
Bear of the Day:
BlackRock Capital is a class of investment known as a “Business Development Company” (BDC) which were created by a 1980 amendment to the Investment Company Act of 1940. BDCs are unregulated closed-end investment companies that invest in small and mid-sized businesses. They are similar to Private Equity or Venture Capital Funds, except that they are usually traded on an exchange like a stock, instead of being open only to very wealthy investors.
BlackRock Capital provides middle-market companies with flexible financing solutions, including senior and junior, unsecured and subordinated debt securities and loans and equity securities. Unlike a traditional private equity firm, BlackRock Capital makes non-control investments in middle-market companies.
The goal of a BDC is to invest in non-public companies that investors would not otherwise have access to and to provide cash distributions to shareholders based on the cash flows of its investments. Taxed as a Regulated Investment Company (RIC), BlackRock Capital pays little or no corporate income tax as long as it passes through at least 90% of taxable income as dividends to investors.
Unfortunately, credit quality across the middle-market lending space has been declining lately and BDCs like BlackRock Capital have seen a smaller pool of poorer performing loans than in the past. In their most recent earnings press release, Chairman and interim CEO James Keenan commented, “Generally speaking, the loan market remains issuer friendly with tighter spreads, higher leverage levels and weaker structures, which is a continuation of market conditions seen over the last 12-18 months.”
This is a familiar sentiment across the middle-market lending sector. As large investment vehicles with cumulative trillions of dollars that need to be invested - like Pensions, Public Retirement Funds and Endowments - reach for yield in a low interest rate environment, loan quality is getting squeezed, with less-deserving issuers getting more attractive deals.
BlackRock Capital Shares have declined nearly 40% over the past 4 years as the company has missed numerous quarterly estimates, even as the consensus has steadily declined. Due to declining earnings estimates, BlackRock Capital is a Zacks Rank #5 (Strong Sell).
3 Stocks to Tap the Minimally Invasive Surgery Market Boom
The United States has hit rough waters of late. Few analysts label the troubles as self-invited while others foresee a revolution. Rising trade war tensions between the United States and China are showing no signs of abatement. The issue has escalated to a point where imposition of tariffs and retaliatory tariffs may go up to $450 billion on both the sides.
Moreover, President Trump’s mulling over a restriction for Chinese companies when it comes to investing in U.S. tech firms to avert technology export is likely to worsen the scenario. If this wasn’t enough, the United States is urging countries to stop importing oil from Iran by November, raising supply-related concerns
Furthermore, Trump’s decision to impose tariffs on steel and aluminum imported from China, the European Union, Mexico and Canada along with threats of higher tariffs for imported cars and auto parts have raised concerns.
MedTech on Stable Ground
In the wake of such a rocky scenario, investors are consistently on the lookout for safer sectors. With tailwinds like favorable consumer behavior, growing demand for liquid biopsy tests along with deferred implementation of an industry-wide Medical Device tax backing the sector, the medical device space seems to be in safer territories. Per Emergo, the U.S. Medical Device industry is likely to be worth $173 billion by 2019.
Minimally-Invasive Surgical Device Market Hogs Limelight
For investors trying to pick a sub-industry with booming prospects, the minimally-invasive surgical device market is the final stop.
Reduced stay at hospital, lower healthcare costs and pain, scaring and tissue-damage are certain benefits of opting for minimally-invasive surgery over the traditional process.
Persistence Market Research estimates the global minimally-invasive surgical device market to value around $18,900 million in 2022, at a CAGR of 6.8% between 2017 and 2022. Per a report by Mordor intelligence, the U.S. minimally invasive surgery device market is projected to see a CAGR of 8.65% between 2018 and 2023.
Factors Driving the Market
The minimally-invasive surgical device market is largely dependent on the aging population. Per the U.S. Census Bureau report, in 2050, people aged 65 or more are likely to total 83.7 million, almost double its estimated population of 43.1 million in 2012. Data also shows that the median age is increasing in most areas of the country and the global scenario is pretty similar.
Strengthening emerging markets have been contributing largely to the rise in demand for minimally-invasive surgical devices. Geographically, the market is divided into North America, Europe, Latin America, Asia-Pacific, and Middle East & Africa. Per Wise Guy Reports, the demand for minimally-invasive surgical devices will be solid in the Asia-Pacific region, the expected CAGR being 12.2% between 2016 and 2021.
The growing dominance of AI applications in healthcare and technological revolution, new avenues and opportunities in the minimally-invasive surgical devices space with robot-assisted surgeries being in vogue. In this context, the first generation of surgical robots is being installed in a number of operating rooms globally.
Stocks to Watch Out For
We have picked three companies, which we believe can help tap the booming prospects of the minimally-invasive surgical devices market.
Intuitive Surgical, Inc.: This Zacks Rank #3 (Hold) company designs, manufactures and markets the da Vinci surgical system — an advanced robot-assisted surgical platform. This Mechatronic-based platform enables minimally-invasive surgery that helps avoid the trauma associated with open surgery. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company plans to expand the usage of da Vinci in general and thoracic surgery, colorectal surgery and hernia repair in the days to come.
Intuitive Surgical has an expected earnings growth rate of 14.1% for the current year.
Over the past three months, Intuitive Surgical has outperformed its industry. The stock has gained 15.4% against the industry’s 14.6% fall.
Medtronic plc: This Zacks Rank #3 company has Minimally Invasive Therapies Group, formerly referred to as the Covidien Group following completion of the Covidien acquisition as one of the segments. The company offers ablation systems, acute care ventilation systems, brain and capnography monitoring systems along with a host of other products.
Medtronic has an expected earnings growth rate of 7.3% for the current year. The stock has delivered positive earnings surprises in all of the trailing four quarters, the average beat being 3.9%.
Over the past three months, Medtronic has outperformed its industry. The stock has risen 6.5% compared with the industry’s 4.6%.
NuVasive, Inc.: This Zacks Rank #3 company leads the global medical device spine market, focused on developing minimally-disruptive surgical products and procedurally-integrated solutions for the spine. The company’s principal product includes a minimally-disruptive surgical platform called Maximum Access Surgery (MAS). In the recent past, the company has launched XLIF Crestline, lateral ALIF and lateral MIS fixation.
NuVasive has an expected earnings growth rate of 28.3% for the current year.
Over the past month, NuVasive has outperformed its industry. The stock has gained 3.4% compared with the industry’s 0.2%.
5 Medical Stocks to Buy Now
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BlackRock Capital Investment Corporation (BKCC) : Free Stock Analysis Report
Polaris Industries Inc. (PII) : Free Stock Analysis Report
Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report
Medtronic PLC (MDT) : Free Stock Analysis Report
NuVasive, Inc. (NUVA) : Free Stock Analysis Report
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