Rahmat Gul/AP
- There have been few winners in the stock market recently, but Matthew Taylor of UBS says there are a few medical technology companies that could benefit from the response to the coronavirus outbreak.
- Just as importantly, there are some companies in the industry that are more vulnerable than their peers to supply chain trouble and delays.
- A key point is some medical device companies are relying on China as a major driver of revenue growth.
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Healthcare stocks are in something of a unique position during the ongoing coronavirus-linked selloff because of the wide variety of good, bad, and mixed effects on their businesses.
UBS analyst Matthew Taylor is drilling down into medical technology companies to assess what the viral outbreak means for their businesses. That involves evaluating their business lines, supply chains, procedural volumes, and the geographies of their businesses.
That can help investors get a handle on what to do and what not to do with their money as the COVID-19 epidemic spreads. As of Friday, more than 100,000 people have been infected around the world, and 3,400 have died.
In his estimation, the most at-risk companies are the ones that are relying heavily on China as a source of growth, as well as those that get a lot of their revenue from less-vital medical procedures that can be postponed because of the epidemic.
In a note to clients, Taylor says the overhang on these companies won't last, but he cautions that the recovery in delayed procedures is going to be a gradual one.
"In our view, the impacts will likely be limited to a 1x negative in the coming periods; over time we expect most of the missed procedures to come back," he wrote. "Impacted regions could see a modestly elevated level of utilization for several quarters as patients re-enter the system and seek treatment."
He continued: "Given patient fears about visiting healthcare facilities, we think this benefit likely lags containment of the virus in affected regions by weeks or months."
What follows is a list of two companies that could ultimately see more demand for products and services as a result of the outbreak, and seven that could remain under pressure during that slow recovery. They're ranked based on how the percentage of their annual revenue growth that comes from China.