5 Beaten-Down Medtech Stocks to Buy on the Dip Because record-high inflation and expected interest rate hikes are roiling the equity markets, it could be wise to buy MedTech stocks due to the industry's solid growth prospects and a...
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Because record-high inflation and expected interest rate hikes are roiling the equity markets, it could be wise to buy MedTech stocks due to the industry's solid growth prospects and a near-inelastic demand for MedTech products with rising health awareness. So, we believe quality MedTech company stocks ResMed (RMD), Merit Medical (MMSI), Owens & Minor (OMI), Integer Holdings (ITGR), and Orthofix Medical (OFIX), which are currently trading significantly below their 52-week highs, could be good additions to one's portfolio now. Let's discuss.
The COVID-19 pandemic ushered in drastic changes in the global medical healthcare industry. The Medtech industry has been thriving on a rising demand for telehealth consultations and the rapid digitization of medical research and diagnostics. In addition, an acute labor shortage has contributed to the increasing demand for MedTech products due to their sheer convenience. Thus, the recent dip in MedTech stocks as part of the broader market's sell-off on concerns about sky-high inflation and the Fed's plans to raise interest rates could represent a solid entry opportunity.
Amid rising health awareness, accurate and quick medical treatment procedures are in great demand. According to GlobeNewsWire, the North American and European medical technology market is expected to grow at an11.5% CAGR from 2021 - 2028.
Fundamentally sound MedTech stocks ResMed Inc. (RMD), Merit Medical Systems, Inc. (MMSI), Owens & Minor, Inc. (OMI), Integer Holdings Corporation (ITGR), and Orthofix Medical Inc. (OFIX) are currently trading significantly below their 52-week price highs. So, we think these stocks could be solid bets now.
Click here to checkout our Healthcare Sector Report for 2022
ResMed Inc. (RMD)
RMD in San Diego, Calif., develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments: Sleep and Respiratory Care; and Software as a Service.
On Jan. 27, 2022, Mick Farrell, RMD CEO, said, "Our global ResMed team continues to find ways to deliver products and solutions to our customers, even amid ongoing supply chain challenges that have limited additional access to critical electronic components. We are working every day to meet the extraordinary demand generated by our competitor's ongoing device recall."
RMD's net revenue increased 11.9% year-over-year to $894.87 million in the third quarter, ended Sept. 30, 2021. Its non-GAAP net income came in at $216.22 million, up 4.8% year-over-year. And its non-GAAP EPS was $1.47, up 4.3% year-over-year.
Analysts expect RMD's revenue and EPS to increase 17% and 14.6%, respectively, year-over-year to $3.74 billion and $6.11 for fiscal 2022. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 19.6% in price to close yesterday's trading session at $241.05. It is currently trading 20% below its 52-week high of $301.34, which it hit on September 9, 2021.
RMD's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
RMD has a B grade for Growth, Stability, and Quality. Within the Medical - Devices & Equipment industry, it is ranked #33 out of 165 stocks. Click here to see the additional POWR Ratings for Value, Momentum, and Sentiment for RMD.
Merit Medical Systems, Inc. (MMSI)
MMSI manufactures and markets disposable medical devices for interventional, diagnostic, and therapeutic procedures in cardiology, radiology, oncology, critical care, and endoscopy. The South Jordan, Utah-based company operates in two segments: Cardiovascular and Endoscopy.
On Oct. 28, 2021, Fred P. Lampropoulos, MMSI's Chairman and CEO, said, "Our growth was driven by strong sales of our Cardiovascular products, including sales growth in the mid-to-high teens year-over-year in our Peripheral Intervention and Cardiac Intervention products. We delivered strong non-GAAP gross margin performance in the third quarter driven, in part, by early benefits attributable to our Foundations for Growth initiatives, which offset inflationary pressures in raw materials, freight and logistics expenses in the period."
MMSI's net sales increased 9.4% year-over-year to $267.02 million for its fiscal third quarter, ended Sept. 30, 2021. The company's non-GAAP net income came in at $30.21 million, up 26% year-over-year, and its non-GAAP EPS was $0.52, up 23.8% year-over-year.
For its fiscal 2022, analysts expect MMSI's revenue to be $1.12 billion, representing a 5.4% year-over-year rise. The company's EPS is also expected to increase 9.7% year-over-year to $2.38 in fiscal 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock closed yesterday's trading session at $58.60. It is currently trading 20.6% below its 52-week high of $73.85, which it hit on September 2, 2021.
MMSI's POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equals a Buy in our POWR Rating system. Also, the stock has a B grade for Growth, Value, Stability, and Sentiment.
Click here to see MMSI's ratings for Momentum and Quality as well. MMSI is ranked #9 in the Medical - Devices & Equipment industry.
Owens & Minor, Inc. (OMI)
Together with its subsidiaries, OMI operates as a healthcare solutions company in the United States and internationally. It operates through two segments, Global Solutions, and Global Products. OMI is headquartered in Mechanicsville, Va.
On Nov. 3, 2021, Edward A. Pesicka, President & CEO, OMI, said, "We saw continued top- and bottom-line momentum in our Global Solutions segment as a result of share gains as customers recognize our ability to provide scalable and flexible solutions, combined with the market reception to our unique value chain and the goodwill obtained from our response to the pandemic."
OMI's revenue increased 14.4% year-over-year to $2.5 billion in its fiscal third quarter, ended Sept. 30, 2021. Its adjusted non-GAAP net income came in at $56.5 million, up 15.3% year-over-year. Its total assets were $3.58 billion for the period ended Sept. 30, 2021, compared to $3.34 billion for the period ended Dec. 31, 2020.
For its fiscal 2022, OMI's revenue is expected to reach $9.78 billion. Its EPS is estimated to increase 19.6% per annum for the next five years. It surpassed the consensus EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 34.8% in price to close yesterday's trading session at $41.21. It is currently trading 16.2% below its 52-week high of $49.16, which it hit on June 9, 2021.
OMI's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has a B grade for Growth and Value. OMI is ranked #35 in the Medical - Devices & Equipment industry. Click here to see the additional POWR Ratings for OMI (Stability, Sentiment, Momentum, and Quality).
Integer Holdings Corporation (ITGR)
ITGR in Plano, Tex., is a medical device outsource manufacturer in the United States, Puerto Rico, Costa Rica, and internationally. It operates in two segments: Medical and Non-Medical. It is one of the largest medical device outsourcing manufacturers in the world.
On Oct. 28, 2021, Joseph Dziedzic, ITGR's president and CEO, said, "Integer delivered strong year-over-year financial results in the third quarter and continued to execute our growth strategy aggressively. We announced an agreement to acquire Oscor, Inc., which adds proprietary products and technologies, complementary capabilities, and low-cost manufacturing capacity to serve customers in our current markets."
ITGR's sales increased 29.5% year-over-year to $305.57 million in its fiscal third quarter, ended Oct. 1, 2021. Its adjusted non-GAAP net income came in at $34.83 million, up 109.1% year-over-year, and its non-GAAP EPS was $1.05, up 110% year-over-year.
For its fiscal 2022, ITGR's revenue is expected to grow 9.9% year-over-year to $1.33 billion. Its EPS is also estimated to increase at a 12% rate to $4.47 in 2022. It surpassed EPS estimates in each of the trailing four quarters. The stock closed yesterday's session at $80.38. It is currently trading 20.9% below its 52-week high of $101.61, which it hit on July 30, 2021.
ITGR has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Value and Sentiment.
ITGR is ranked #24 in the Medical - Devices & Equipment industry. Click here to see the additional POWR Ratings for ITGR (Quality, Stability, and Momentum).
Orthofix Medical Inc. (OFIX)
OFIX operates as a medical device and biologics company in the United States, Italy, Germany, the United Kingdom, Brazil, and internationally. The Willemstad, Curaçao-based concern operates through two segments–Global Spine and Global Extremities.
On Nov.r 5, 2021, OFIX President and CEO Jon Serbousek said, "New products remain a growth driver in the business. The strong adoption of the M6-C™ artificial cervical disc continues as we recently passed the 60,000 worldwide implant mark, and sales of our FITBONE™ limb-lengthening system have accelerated throughout the year, resulting in third-quarter revenue growing 30 percent sequentially."
OFIX's net sales came in at $112.43 million, up 1.3% year-over-year for the third quarter, ended Sept. 30, 2021. Its total current liabilities were $80 million for the period ended Sept. 30, 2021, compared to $103.9 million for the period ended Dec. 31, 2020. The company's total liabilities were $135.56 million, compared to $169 million, for the same period.
OFIX's revenue is expected to be $488.52 million, increasing at 5.4% year-over-year. Its EPS is also estimated to increase 11.3% to $0.79 in fiscal 2022. It surpassed EPS estimates in three of the four trailing quarters. Over the past month, the stock has gained 2.3% to close yesterday's session at $31.75. It is currently trading 34.5% below its 52-week high of $48.50, which it hit on Feb.24, 2021.
OFIX has an overall B rating, which equates to Buy in our POWR Ratings system. It has a B grade for Value and Quality. It is ranked #18 in the Medical - Devices & Equipment industry. Click here to check additional ratings for OFIX (Growth, Momentum, Stability, and Sentiment).
Click here to checkout our Healthcare Sector Report for 2022
RMD shares were trading at $242.94 per share on Wednesday morning, up $1.89 (+0.78%). Year-to-date, RMD has declined -6.73%, versus a -3.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
The post 5 Beaten-Down Medtech Stocks to Buy on the Dip appeared first on StockNews.com
