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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

BofA Securities analyst Travis Steed believes medical technology stocks are on sale,

“Medtech sold off post Q1 as investors realized Q1 rev beats had catchup/easy Jan comps, year-over-year growth is decelerating and rev beats will get smaller (and some flows into Tech sector). Over the last month medtech is down 6 per cent … The short-term focus on owning medtech during the transition back to more sustainable year-over-year growth has created an attractive opportunity, in our view. Medtech is at a 9.5-per-cent premium to the S&P vs 20 per cent plus a month ago… We like BSX in premium medtech, MDT in value, BDX in non-elective medtech, and ISRG in growth medtech. BSX has plenty of new growth drivers in 2024 … that can accelerate 2024 growth when the Street models a deceleration (Street at 7.8-per-cent growth in 2024). MDT’s sell-off last week looks overdone as FQ4 looks more in line after adj for Jan comp and our view is MDT is just taking a conservative approach on guidance. We see BDX as the cheapest way to get double-digit EPS growth and the multiple likely re-rates once these revenue growth rates prove sustainable. ISRGs Q1 procedures still grew 19-20 per cent after one[1]timers and robotics appears to have accelerated post-CO”


Scotiabank strategist Hugo Ste-Marie notes that U.S. market leadership has been narrow to a near-record extent,

“The S&P 500 year-to-date rally (up 9.5 per cent) is supported by a very limited number of stocks. For reference, 259 stocks are down this year, with the S&P 500 equal-weight index, which represents the “average” stock, trading slightly into negative territory (down 0.4 per cent). From a tactical standpoint, the S&P 500 13-week outperformance relative to the equal-weight index is getting quite stretched by historical standards. In fact, the 987 basis points outperformance over the last 13 weeks is a three-standard-deviation move and a new record high … While we would expect some mean-reversion after such a massive outperformance in a very short time frame, don’t underestimate the FAANGM+ momentum. While Big Tech is showing signs of overheating, recall that the S&P 500 enjoyed a strong, and sustained, outperformance relative to the S&P 500 equal-weight index for most of 1998, 1999 and 2000. Such a narrow leadership likely makes it extremely challenging for portfolio managers, who maintain more broadly diversified portfolios, to compete with the benchmark”

“Scotiabank; “S&P 500 vs S&P 500 Equal-Weight: A Three-Std-Dev Outperformance”” – (research excerpt) Twitter


Jefferies analyst Michael Yee sees upside for stocks involved with the global spread of vaccines,

“We point out that since COVID, the public health awareness of respiratory viruses is higher than ever and there is significant interest to reconsider virus vaccinology in a post-pandemic world. We estimate the annual market oppty for vaccines targeting flu, COVID and RSV may reach $35-billion globally across U.S., EU, China and Japan over time. We highlight RSV as a $15-billion opportunity with high unmet needs and multiple new launches coming, see COVID as an $8-billion endemic markets and believe flu vaccines could grow from $7-billion to $10-billion over time. We see MRNA, GSK, SNY, BAVA and ICVX as the best positioned. "

“Jefferies likes global vaccine stocks,” – (research excerpt) Twitter


Diversion: “Ancient DNA analysis: 10 Breakthrough Technologies 2023″ – M.I.T. Technology Review

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