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Baird mentioned it sees medtech outperforming the broader market in 2024 after three years of underperforming, however stays cautious concerning the dental and aesthetics markets near-term.
The funding financial institution famous that medtech received a lift from final week’s funding convention in San Francisco, with the iShares US Medical Units ETF climbing 2.8% over the previous 5 days, beating the S&P 500, which rose 1.6%.
Baird’s prime medtech picks for 2024 proceed to be Alcon (ALC), Stryker (SYK), The Cooper Corporations (COO) and Boston Scientific (BSX). These picks are actually joined by Dexcom (NASDAQ:DXCM), with Intuitive Surgical (NASDAQ:ISRG) and Encourage Medical Methods (NYSE:INSP) “creeping nearer.”
Medtech affected person volumes appeared to carry up properly in This autumn, with significantly strong demand for hip/knee replacements, diabetes units, contact lenses, ophthalmology merchandise, cardiovascular and neuromodulator units, and surgical robotics, Baird mentioned in a latest be aware. Corporations that preannounced earnings additionally beat Avenue This autumn income estimates, “largely bracketing consensus 2024 expectations and thereby de-risking upcoming reviews,” Baird mentioned in a latest be aware.
“We have now a rising sense that very very low single-digit natural progress is what we’re going to listen to Dentsply Sirona (XRAY), Envista (NVST), and Henry Schein (HSIC) information to for 2024 over the subsequent few weeks on This autumn calls, and off the latest run these shares have had, we now fear such steerage may disappoint,” Baird analysts added.
Baird mentioned that due to this, it was shifting its view of the dental group from “tactically optimistic to tactically impartial to even barely adverse.” It additionally reiterated “a extra cautious 12-month view on all however Align (NASDAQ:ALGN).”
As for aesthetics, Baird mentioned it nonetheless sees InMode (INMD) and Apyx Medical (APYX) as properly positioned for the continuing trade shift from liposuction to physique contouring. It additionally believes corporations centered on skin-tightening procedures reminiscent of InMode will profit within the long-run from the recognition of GLP-1 weight-loss medicine.
Regardless of this, Baird cautioned InMode traders to “brace for what may in the end be a 2024 information that requires little to no income progress this yr relative to 2023.”
Generally, Baird sees medtech margins bettering this yr as corporations return to specializing in enhancing effectivity after years of grappling with provide chain issues.
As for particular person corporations, Baird mentioned Boston Scientific’s deliberate merger with Axonics (AXNX) underscores its place as a prime thought for 2024, on condition that each corporations have been on its picks checklist transferring into the brand new yr.
The funding financial institution has additionally added Dexcom to its prime picks checklist, citing its non-insulin sensor Stelo as a progress driver. It additionally sees the corporate delivering round 25% to 30% EBITDA progress “over the speedy time period.”
Baird famous that Intuitive and Encourage Medical simply narrowly missed making the checklist. The funding agency mentioned that Intuitive “creeps nearer” after issuing a “no remark” a couple of new system in 2024, whereas Encourage “stays on the sting given anticipated volatility surrounding SURMOUNT-OSA’s early 2024 readout.”
