Med-tech firms may make sense for well being care buyers in 2023 as defensive sector

Amid inflation issues and financial uncertainty going into 2023, one well being care sector is poised to reap dividends for buyers: med-tech firms.

That is the evaluation from Canaccord Genuity’s William Plovanic who calls med-tech “a defensive sector with enhancing fundamentals.”

He’s significantly bullish on firms within the sector targeted on cardiovascular, neuromodulation, respiratory, ophthalmology, oncology, and organ transplant.

“We anticipate sturdy demand regardless of a doubtlessly looming recession,” Plovanic wrote in a current observe to buyers. “We anticipate that development may speed up in 2H/23 as [foreign exchange] headwinds annualize and healthcare staffing points steadily decline.”

He added that given the growing older inhabitants of the US in addition to the acute situations many med-tech firms’ merchandise deal with, a recession would not have a lot of an impression and “med-tech is an efficient place for buyers to climate the approaching storm.”

The long run can be promising for well being expertise firms, Plovanic says, as a consequence of the truth that by 2030, your complete Child Boomer inhabitants will probably be 65 and older and make up 21% of the US inhabitants.

Extra instantly, the largest problem for med-tech firms in 2023 are healthcare staffing shortages, although Plovanic expects it to abate because the yr goes on.

Plovanic has three shares he’s significantly bullish on: ShockWave Medical (NASDAQ:SWAV), TransMedics (NASDAQ:TMDX), and Nevro (NYSE:NVRO).

ShockWave (SWAV) markets intravascular lithotripsy expertise for calcified plaque in sufferers with peripheral vascular, coronary vascular, and coronary heart valve ailments. Yr thus far, shares are up ~9%.

Plovanic has a worth goal of $247 (~18% upside based mostly on Friday’s shut). He famous that the arrival of latest merchandise will serve to spice up common promoting costs and drive total development for the corporate. He cited the brand new M5+ machine to deal with calcium buildup in peripheral arteries and the upcoming launches of L6 in H1 2023 and an improved coronary C2+ within the second half of the yr.

TransMedics (TMDX) gives organ transplant remedy for end-stage organ failure sufferers. Yr thus far, the inventory is up 192%.

Plovanic’s worth goal is $68 (14% upside). He famous that in 2022, TransMedics was not in a position to sustain with demand for its merchandise. Nevertheless, the corporate has targeted on hiring extra personnel and growing its clear room capability.

The analyst spoke extremely of the corporate’s Nationwide OCP program, which makes it simpler to ship organs throughout the nation. Plovanic famous that TransMedics (TMDX) has created 15 geographic launch areas for this system, is including help workers, and intends so as to add transportation capabilities with a flight logistics supplier.

In search of Alpha contributor Tyler Maryott just lately known as TransMedics (TMDX) his prime decide for 2023.

Nevro (NVRO) is understood for the Senza spinal twine stimulation system (“SCS”) for continual ache. Yr thus far, the inventory is down ~53%.

Plovanic has a $67 worth goal (~67% upside). He sees 14% year-over-year income development in 2023.

Plovanic famous Nevro’s (NVRO) just lately launched HFX iQ system is the primary SCS to have synthetic intelligence capabilities as it might probably alter based mostly on a person’s notion of ache. He added this profit will assist the corporate’s gross sales reps in gaining new accounts.

Lastly, the analyst mentioned there are different firms within the house that he views as a purchase — resembling Boston Scientific (NYSE:BSX), Penumbra (PEN), Inari Medical (NARI), and iRhythm Applied sciences (IRTC) — however buyers ought to ideally wait to buy till a share pullback or a enterprise momentum increase.