Zacks Industry Outlook Highlights: Johnson & Johnson, Medtronic, Zimmer Biomet and Roche

For Immediate Release

Chicago, IL – December 02, 2016 – Today, Zacks Equity Research discusses the Medical Devices, Part 1, including Johnson & Johnson (NYSE:JNJ –Free Report),Medtronic (NYSE:MDT –Free Report),Zimmer Biomet (NYSE:ZBH –Free Report) and Roche (OTCMKTS:RHHBY – Free Report).

Industry: Medical Devices, Part 1

Link: https://www.zacks.com/commentary/97124/medtech-industry-stock-outlook---december-2016

Fate of U.S. Healthcare: Trump Policies to Replace Obamacare

The United States is clearly divided into “we need” and “don’t need” when it comes to existing healthcare policy. Currently we envision the change not just a makeover, but a high chance of full retraction and replacement of Obamacare. And most economists believe that the transition is not going to be an easy one.

Why a Strong ‘No’ to Obamacare?

A number of times during his presidential campaign, Donald Trump labeled Affordable Care Act (ACA) as a disaster which requires immediate, less-expensive replacement. According to him, Obamacare is replete with special interest handouts, budget gimmicks and tax increases, all leading to higher premiums and deductibles with reduced access to care. In particular, he talked about the adversities of the Medicaid expansion plan and the two highly controversial taxes — the “Cadillac plan” and the temporarily repealed medical-device tax.

Replacement Outlined by the Republicans at a Glance

The President-elect recently released a sketch of his healthcare offers which highlight a patient-centric healthcare system endorsing choice, quality and affordability with health insurance and healthcare. According to him, the new policy aims at taking necessary actions to alleviate the burdens imposed on American families and businesses by the law.

He also talked about Health Savings Accounts (HSAs), a tax-exempt account in which anyone can deposit funds on one’s behalf, and about his plan to once again return the role of regulating health insurance to the States. According to the plan, the States, with maximized flexibility in administering Medicaid, can go for innovative methods to deliver healthcare to low-income citizens. Also, the plan aims to modernize Medicare to better cope with the pressure of the imminent retirement of the Baby Boom generation.

What the Nation Is Thinking

We await a detailed Trump action plan and are not yet clear on how Obamacare, which has extended health insurance to 21 million Americans, can totally be substituted. Don’t forget, this was the plan that drove the rate of the uninsured to an historic low.

According to a survey released by the Pew Research Center, 54% of Americans disapprove of the 2010 ACA while 44% favor it. However, US News reported that though more Americans say they oppose the law than support it, data also show that people find certain provisions of the law favorable, including mandating coverage to those with pre-existing conditions and allowing children to stay on a parent's plan until age 26.

MedTech Is Hopeful

The Republican win marked a great victory for the entire medical device industry as the likelihood of a permanent repeal of the 2.3% medical device excise tax will come as a big bonus for both the behemoths and the small players. According to medical device trade association AdvaMed, the entire MedTech fraternity is looking forward to the new policymakers who are expected be work toward improving the FDA regulatory process, repealing the medical device tax, and ensuring that the coverage process allows patient access to the latest innovations.

According to the MedTech community, the repeal of this dreadful tax, commonly referred to as ‘fund of the ACA” will directly address issues like lack of opportunity in research and development, innovation, pipeline development and in making investments needed to accelerate patient and provider access to innovative health care products. This will also help in boosting job creation and quality of patient care, enabling the companies to strengthen their position to cope with any new situation that they can after this two-year period.

MedTech Trend at a Glance

Let us now keep aside the political game change and its consequences and see what’s there in it for MedTech investors to gain from. While this sector is generally not in the limelight from an investment perspective, what makes it a compelling choice in this extremely volatile global market is its fundamental defensive nature. Products of this sector are mostly essential and hence less sensitive to business cycle fluctuations.

A recent EvaluateMedTech World Preview claims that the MedTech space is positioned for impressive growth in the near term. Worldwide, Medtech sales are expected to grow at a CAGR of 5.2% to $529.8 billion by 2022.

Steering ahead of Cardiology and Diagnostics, In Vitro Diagnostics (IVD) is expected to emerge as the sector leader in 2022 (13.4% of the industry’s total sales). Neurology, meanwhile, holds promise as the fastest growing division by 2022 (CAGR of 7.6%). On the other hand, Orthopedics, which is already going downhill, may prove to be one of the slowest growing segments in 2022 with a CAGR of 3.8% per year.

While Johnson & Johnson (NYSE:JNJ – Free Report) was the largest device maker of 2014, the picture altered last year following Medtronic’s (NYSE:MDT – Free Report) $50 billion acquisition of Covidien. Medtronic is expected to retain this position in 2022 with a revenue forecast of $39.9 billion.

While Medtronic enjoys a competitive edge with its huge and growing Cardiac and Vascular portfolio, J&J’s forte lies in the orthopedic space (24.1% of market share in 2022). However Zimmer Biomet (NYSE:ZBH – Free Report) is fast catching up to be the second lead in the orthopedic market with 20.6% share by 2022. Roche (OTCMKTS:RHHBY – Free Report), as usual, is expected to remain the leading player in the IVD market in 2022, too.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Get the full Report on JNJ - FREE

Get the full Report on MDT - FREE

Get the full Report on ZBH - FREE

Get the full Report on RHHBY - FREE

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

[email protected]

https://www.zacks.com/

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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
 
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
 
MEDTRONIC (MDT): Free Stock Analysis Report
 
ZIMMER BIOMET (ZBH): Free Stock Analysis Report
 
ROCHE HLDG LTD (RHHBY): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Source : https://finance.yahoo.com/news/zacks-industry-outlook-highlights-johnson-143002458.html

Related Posts