4 MedTech Stocks Gaining Ground on COVID-19 Test Kit Success

With the ending of the Thanksgiving holiday season, the medical fraternity is bracing for a surge in COVID-19 infections. Per a report published on The New York Times, the total number of coronavirus cases in the United States for November has crossed four million on Nov 27, which is expected to make a sharp escalation over the upcoming days as more tests are performed.

Amid these concerning estimates, another blow that has hit home hard is the second stimulus package, which is currently stuck in a deadlock between the Senate and the House. The deadlock persists due to continued disagreement on the size of the package. An uncertain financial stimulus along with the pending approval of vaccines in the United States looms large on America’s economy.

MedTech Scenario

The surge in coronavirus infections is resulting in an imbalance in the U.S. MedTech players’ prospects. We also observed postponement of various elective procedures, which severely impacted a few companies’ non-diversified nature of business. One such notable example is renowned cardiovascular player Cardiovascular Systems, Inc. CSII, which continued to put up dismal performances during the third quarter due to the pandemic-led deferral of procedures. Over the past six months, this stock has lost 12.1% against the industry’s 8.6% rise.

However, companies like renowned diversified health care products provider, Abbott Laboratories ABT, ended the third quarter on a better note. The company has been seeing improvement in both testing and procedure volumes across its hospital-based businesses. The launch of rapid antigen test BinaxNOW also contributed strongly to the quarter’s top line. Over the past six months, this stock has risen 18.7% compared with the industry’s 8.6% rise.

Best MedTech Stocks to Buy Now

Few of the companies, which are actively participating in the fight against the pandemic, performed quite impressively during the recently concluded earnings season due to strength in their testing portfolio. Given the ongoing market volatility, it would be prudent for investors to turn their focus to such stocks to maximize their gains. The companies, which are currently catering to the increasing demand for COVD-19-related testing, are expected to continue with their robust performances amid the pandemic-led market mayhem. This has made them the best investment options at present.

4 Stocks to Buy

Here we have picked four stocks from the MedTech space which have held their ground during the pandemic-led market meltdown, primarily due to the nature of their business. These stocks performed impressively during the third quarter given the strength in their COVID-19 requirements. These stocks, with strong growth potential, are extremely attractive picks now.

These companies currently carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have outperformed their respective industries in recent times. You can see the complete list of today’s Zacks #1 Rank stocks here.

Listed below are four companies that investors can keep an eye on during the grim economic scenario.

The first company that investors can consider is renowned diagnostics player, Hologic, Inc. HOLX. This Zacks Rank #1 company registered continued growth in the core molecular diagnostics sub-segment in the fourth quarter of fiscal 2020. The company, in October, announced the amendment of the FDA’s Emergency Use Authorization (EUA) that was initially received for its Aptima SARS-CoV-2 assay. Further, the company received the FDA’s EUA for its Panther Fusion SARS-CoV-2 assay in September.

Its return on equity (ROE) stands at 45.2% against the industry’s negative return. Further, its projected earnings per share (EPS) growth rate currently stands at 59.8% versus the industry’s 9.9%. The company projects 17.4% earnings growth for the next five years. Over the past six months, this stock has risen 29.7% compared with the industry’s 13.6% rise.

Our next pick is healthcare diagnostics company Laboratory Corporation of America Holdings LH or LabCorp. This Zacks Rank #1 company’s Diagnostics segment’s revenues in the third quarter of 2020 were significantly high on organic volume improvements as a result of growing demand for COVID-19 testing. LabCorp is currently performing COVID-19 testing in more than 20 laboratories across the United States and its capacity is greater than 210,000 polymerase chain reaction (PCR) tests and more than 300,000 antibody tests per day.

Its ROE stands at 21.1% compared with the industry’s 13.3%. Further, its projected EPS growth rate currently stands at an impressive rate of 80.3% versus the industry’s 6.3%. The company projects 10.1% earnings growth for the next five years. Over the past six months, this stock has risen 12.4% compared with the industry’s 11.1% rise.

The next stock that investors can consider is well-known science and healthcare solutions provider PerkinElmer, Inc. PKI, which currently sports a Zacks Rank #1. The company, in November, announced that its SARS-CoV-2 Real-time RT-PCR Assay has received the CE-IVD marking for using saliva as a specimen type and the option to pool up to five specimens collected from individuals suspected of COVID-19 or asymptomatic individuals.

Its ROE stands at 21.6% against the industry’s negative return. Further, its projected EPS growth rate currently stands at an impressive rate of 73.6% versus the industry’s projection of a loss. The company projects 30.3% earnings growth for the next five years. Over the past six months, this stock has risen 32.1% compared with the industry’s 26.7% rise.

Our final pick is Thermo Fisher Scientific Inc. TMO, a key scientific instrument maker and renowned name in serving science. This Zacks Rank #2 company launched the Amplitude Solution during the third quarter to automate high-throughput PCR-based testing. It also undertook significant capacity expansion for viral transport media production in Europe and introduced two COVID-19 antibody tests that are currently available in the United States and Europe.

Its ROE stands at 21.4% against the industry’s negative return. Further, its projected EPS growth rate currently stands at 48.5% versus the industry’s 9.9%. The company projects 18% earnings growth for the next five years. Over the past six months, this stock has risen 35.7% compared with the industry’s 13.6% rise.

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Hologic, Inc. (HOLX) : Free Stock Analysis Report
 
PerkinElmer, Inc. (PKI) : Free Stock Analysis Report
 
Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report
 
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
Cardiovascular Systems, Inc. (CSII) : Free Stock Analysis Report
 
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