Zacks Industry Outlook Highlights: Johnson & Johnson, Medtronic, Zimmer Biomet And Nxstage Medical

For Immediate Release

Chicago, IL – December 05, 2016 – Today, Zacks Equity Research discusses the MedTech, Part 3, including Johnson & Johnson (NYSE:JNJ) (NYSE:JNJ –Free Report),Medtronic (NYSE:MDT) (NYSE:MDT –Free Report),Zimmer Biomet (NYSE:ZBH –Free Report) and Nxstage Medical, Inc. (NASDAQ:NXTM – Free Report).

Industry: MedTech, Part 3

Link: https://www.zacks.com/commentary/97254/medtech-sails-through-macro-woes-stocks-in-focus

Three full quarters of 2016 are behind us and, as expected, the trend has hardly changed for the bullish MedTech sector even amid severe economic instability surrounding one of the most controversial political power changes in history. This is because some powerful long-term tailwinds like mergers & acquisitions (M&A), emerging market expansion, positive demographic trends and new product innovation are the vital forces behind the continued uptrend in the sector’s performance.

In addition, the recent change in consumer demand and market dynamics led to a dramatic transformation in the healthcare system. This is evident from the growing prevalence of minimally invasive surgeries, rising demand for liquid biopsy tests, use of IT for ensuring efficient patient care and the shift of the payment system to a value-based model.

Let’s go through some of the major long-term tailwinds of the MedTech sector.

Major M&As

By now we know how Medtronic (NYSE:MDT – Free Report) knocked Johnson & Johnson (NYSE:JNJ – Free Report) from its indisputable position as the top firm in the medical devices space, thanks to its $43 billion Covidien merger. It’s really amazing how a single mega consolidation shook up the dynamics of the entire medical devices space.

And after that the industry hasn’t taken a breather with strategic mega consolidations continuing to pour in. Deals like Zimmer-Biomet (NYSE:ZBH – Free Report) , Johnson & Johnson–Synthes, Thermo Fisher-Life Technologies and many more gave birth to unprecedented leaders in their respective niche markets.

Also, Zimmer Biomet’s impending acquisition of LDR Holding Corp. for a total deal value of $1 billion is expected to boost the spine portfolio of the former.

Emerging Market Openings

As per recent data from Euromonitor International, the global medical device production value is likely to register strong growth of almost 6% in 2016, to reach $315 billion. While the traditional market continues to be plagued by difficulties like growing regulatory scrutiny and pricing pressure, it’s the Asia Pacific region on which all bets are being placed this year.

The MedTech market in Asia Pacific grew the fastest at a CAGR of 10% during 2008–2014 and is expected to continue to grow rapidly over 2016 as well. According to the report, China and India’s healthcare service revenues are expected to grow by 12% and 9%, respectively, in 2016 alone.

Abbott continues to lead the emerging market investment trend with about 50% of sales from this region. In the third quarter of 2016, sales in key emerging markets climbed in double digits driven by growth in India, China and Latin America.

At Medtronic, emerging markets demonstrated strong growth in its second quarter of fiscal 2017, contributing 120 basis points (bps) to the company’s overall revenue growth. Boston Scientific Corp. (NYSE:BSX) achieved 19% organic growth in emerging markets in the third quarter, driven by 26% growth in China and 21% growth in Latin America.

Strongest Links

Among the medical product stocks, Nxstage Medical, Inc. (NASDAQ:NXTM – Free Report) looks attractive, sporting a Zacks Rank #1 (Strong Buy) and with a VGM score B. We note that, stocks with a VGM Score of A or B and a Zacks Rank of #1 or #2 have highest probability of success.

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