Device Market Will Fare Better than Other SectorsDevice Market Will Fare Better than Other Sectors
Although it is clear that the medical device market is affected by the recession, it does seem on track to perform better than other sectors, according to Seeking Alpha, a stock market opinion and analysis firm.
January 16, 2009
The firm believes that "on a relative basis, investors will fare better in the stocks of [device] companies, with less risk than other sectors of the stock market, for several reasons."Here are the three factors mentioned: First, the underlying demand for healthcare continues to grow with the continued aging of the population in the U.S. and Europe, noting that 13,000 Americans will turn 60 years of age every day for the next 20 years. Second, much of spending in the U.S. for healthcare is tied to Medicare, which is a stable source of funding. Third, much of the demand for healthcare is not tied to discretionary spending.The firm also points out that "based on 2009 estimates, the medical technology group is selling at 13.4X, one of the lowest [price-to-earnings ratio] multiples we can remember in quite a long while." However, for long-term investors, the firm predicts that the second half of 2009 could represent an attractive opportunity to develop equity positions in companies with stable earnings prospects and exciting new technologies. It favors companies whose products are lower tech and in constant demand, regardless of the economy, such as point-of-care diagnostics, minimally invasive surgical instruments, and general care products such as syringes, catheters, sutures, blood products, etc.
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