Author: Raj Gupta

Raj Gupta is Director, Research Analyst. After joining the firm in 2002 as a research analyst, Raj was appointed senior equity analyst in 2006, and lead senior equity analyst in 2014—largely because of his ability to select outperforming stocks. He acts as an expert in the O’Neil Methodology and contributes to the direction of product and service line development. He recommends securities for addition to or removal from the U.S. Focus List, or USFL, and the associated alerts to clients. During his tenure, he was part of the leadership that developed the Global Focus List, which marked the firm’s successful expansion into international equity recommendations. He is also a lead on the IPO Rewind report and contributes to weekly summaries on the performance of the U.S. market. Much of his expertise is delivered as highly customized service to clients. RAj earned his Bachelor’s degree in Economics from the University of California, Santa Barbara. He began working at the firm directly out of college, driven by his passion for investing and stocks. An avid soccer player, he built and managed an adult league in the Los Angeles area, in which he still plays. He also enjoys international travel; he and his wife commit to at least one major adventure a year.

Global Health Care Sector— Medical Devices and Equipment

Posted on by Raj Gupta

Some highlights from the report:

U.S.

Given our recent downgrade of the U.S. market to a Downtrend, we now recommend an equal-weight position from overweight within Medical Technology. The iShares U.S. Medical Devices ETF ( IHI ) has broken both its 50- and 100-DMA on heavy volume. We believe the next level of support is the 200-DMA, which is ~5% lower.

Multiple ideas across the U.S. Focus List have broken near-term levels of support warranting a cautious approach until technical profiles improve.

Fundamental profiles remain intact and valuation and growth remain in line with historical medians. The current 66 profitable companies above $500M in market cap within the Medical Product and Equipment industry groups have a five-year EPS median growth rate of 13% and a five-year median (high-to-low) P/E ratio range between 16 and 45. Over the next year, consensus calls for similar growth and valuation. Next fiscal year’s EPS is expected to grow by a median of 13% with a P/E ratio of 25x.

U.S. Focus List ideas: ABMD, ALGN, IDXX, ILMN, EW, PRAH; Stocks of Interest: WMGI, HAE

 EMEA

Health Care remains a long-term leading sector, but has come under severe selling pressure over the last two weeks due to general market weakness. We recommend a selective approach across the region with few growth ideas currently showing technical strength.

European Focus List idea:STMN.CH; Stock of Interest: ELKB.SE

 APAC

Health Care is outperforming over the last 26 weeks, but is now weakening over the last month. There are multiple stocks of interest in this region, as many ideas have strong fundamental profiles, despite weak technical profiles. We recommend a patient approach until market conditions improve before buying medical technology ideas within the region.

APAC Focus List ideas: AS@H.JP, COH.AU, NAN.AU; Stocks of Interest:WXBO.HK, MPS.HK, TERU.JP

Nanosonics

Posted on by Raj Gupta

Key Points:

The stock regained its 50-DMA on heavy volume after an Australian investment firm announced the acquisition of 15M shares. We recommend building positions as the stock forms the right side of a new base.

Technical ratings: Sharp rise in the stock‘s RS line this week, RS Rating 85, A/D Rating A+.

Fundamental ratings: EPS Rank 62 (expected to improve given consensus EPS growth of 50% in FY 2019 and 167% in FY 2020), Composite Rating 92, SMR Rating C.

Abiomed

Posted on by Raj Gupta

Key points from the report:

The stock is building the right side of a new base in very heavy volume. We recommend building a position now, ahead of the pivot point of $450.93.

Technical ratings: Sharp rise in the stock’s RS line this week, RS Rating 97, A/D Rating C+.

Fundamental ratings: Highest EPS Rank of 99, top SMR Rating of A, best Composite Rating of 99.

Edwards Lifesciences

Posted on by Raj Gupta

 

Key points from the report:

The stock is actionable after breaking out of a cup pattern. Support is the top of the base at ~$157. The stock becomes extended above $164.

Technical ratings: RS line is at multi-year highs. RS Rating 84. A/D Rating A-.

Fundamental ratings: EPS Rank 88. Top SMR Rating A. Composite Rating 98.