Biotech Values

[Mufaso]

Now Ozempic/weight loss drugs (already thought to be causing Nash market decline) are thought to cause device maker stock underperformance per a Barrons' column article this week - "Medtech Stocks Sell Off. Why the Culprit Could Be Ozempic."

Jack Hough in his streetwise column dryly asks:

What’s eating medtech stocks?

Maybe Ozempic angst. Wall Street calls that a near-term buying opportunity. Longer term, it’s food for thought.

...MDT Medronic has underperformed by 8% this year...Edwards Lifesciences (EW) is lagging behind the market by 11 points this year; Boston Scientific (BSX), eight points; Abbott Laboratories (ABT), 19 points; Stryker (SYK), five points; Becton Dickinson (BDX), 12 points; Baxter International (BAX), 31 points; Johnson & Johnson (JNJ), 20 points; and Zimmer BiometHoldings (ZBH), 19 points. “Medtech pain...how much more?” read the title of a BofA Securities note this past week.

J.P. Morgan is quoted in the article:

JPM has a theory, and it doesn’t involve alien pods. Medtech has turned noticeably weaker in recent weeks. The stock chartsmore or less point to July 20, and an earnings call by Intuitive Surgical (ISRG), known for its Da Vinci robots and its 18,000% stock gain over two decades. “Within one of our target procedure areas, bariatric surgery, our growth rate in the U.S. slowed during the quarter,” the company’s chief financial officer said on the call. “Some customers have indicated that they are seeing increased patient interest in weight-loss drugs.”

The recommendation JPM is making is interesting:

JPM says to scoop up medtech shares, citing strong sales and margins, promising development pipelines, and reasonable valuations. “We see this as peak GLP-1 fears, many of which aren’t well founded,” its analysts wrote.

Here is a link to the full article if you have a subscription to Barron's:

https://barrons-nj.newsmemory.com?selDate=20230807&goTo=10