Credit Suisse Shares 5 Medical Stocks On The Way To Outperform As Omicron Shakes Global Markets – And Explains Why These Are Attractive Buy Even If The New Variant Isn’t As Dangerous As Feared

Investors worried about the new Omicron variant should not abandon medical device makers, says Credit Suisse.
  • The new variant of COVID-19 sent global markets tumbling down last week, and more volatility is likely.
  • In the past, many surgeries have been canceled to slow the spread of the virus.
  • Matt Miksic of Credit Suisse says it won’t happen this time around and names his top health stock picks.

The first wave of the COVID-19 pandemic has resulted in surgeries being stopped across the country. When the Delta variant spread around the world, proceedings were put on hold again. But Credit Suisse expects this not to happen again with the Omicron variant.

These closures, which focused on less urgent surgeries and elective procedures, were a big problem for medical device companies and other medical businesses, like operators of outpatient surgery centers.

Matt Miksic, senior research analyst at Credit Suisse, said that while fears about the new variant would make the medical device industry nervous, things have changed dramatically – and the effects on the industry will now be much less severe than by the pass.

“We expect that health systems in countries with higher immunization levels will be able to handle this next wave without significant procedural postponements or hospital closures,” Miksic wrote in a recent note to clients. .

But investors feared a more dire scenario on Friday, when they triggered the Dow Jones’ worst selloff since October 2020 after South African health officials disclosed the new variant. Stocks rallied on Monday after President Joe Biden allayed concerns over another economic lockdown and said Omicron was “a cause for concern, not a cause for panic.”

The data presented by Miksic supports this view. He said that as of July, about 30% of surgical capacity in the United States – a measure of hospitals, hospital beds and surgeons – was found in highly immune states. Today, about 90% of all surgical capacity is located in states where at least 70% of the population is immune. This means that epidemics are unlikely to become serious, and politicians and health officials will not feel the need to restrict medical procedures.

And while some states are much more immune than others, there have been a lot of improvements in states with lower immunization levels.

In the nine states that have been hardest hit by Delta, Miksic wrote, the vaccination rate stood at 55% before this wave of the pandemic began and rose to 67% in early September. With a higher percentage of the population vaccinated in these nine states, hospitalization rates fell from around 20% to 4% between September and early November.

With more people immunized across the country and more surgical capacity available in highly immune states, Miksic believes medical device inventories are unlikely to face the restrictions that have hurt their sales since the start of the pandemic, despite investor concerns. .

“Our view is that the medical device group is oversold, and unless the vaccines have a lack of protection against severe symptoms, hospitalization, and death, we would expect our favorite names to outperform the market over the next 12 months, ”he said. wrote.

These favorites, all classified as “Outperformance”, are Stryker (target price of $ 311), Edwards Life Sciences ($ 130), Boston scientist ($ 54), Abbott Laboratories ($ 138), and Globus Medical ($ 95).

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