Nomura Starts MedTech Group: STJ, BSX, ZBH, EW, MDT, SYK At Buy, BCR At Neutral

Nomura’s Ed Ridley initiated coverage of the Global MedTech sector with a Neutral stance, while mentioning that the sector offers relatively visible structural growth at a time when global growth remained subdued and the European economy continued to be weak.

Visible Structural Growth

Although concerns surrounding global growth remain, recent data suggested that the US economy was expanding and the Central Bank policy was supportive. Ridley stated that the rise of chronic diseases, ageing, lifestyle changes and the global rise in obesity had boosted demand across most areas of the MedTech segment.

The sector has witnessed material M&A activity in recent years and generates robust cash flows to support further external investment as well as internal growth, the analyst added.

“The global sector trades at a 2017E P/E of 19.3x, with US MedTech at 17.2x and European MedTech at 20.7x broadly in-line with the historical average relative premiums,” the Nomura report mentioned.

Top Stocks To Invest In

• Boston Scientific Corporation BSX – Rated Buy, price target at $22

• Zimmer Biomet Holdings Inc ZBH - Rated Buy, price target at $123
• Edwards Lifesciences Corp EW - Rated Buy, price target at $101
• St. Jude Medical, Inc STJ - Rated Buy, price target at $64
• Stryker Corporation SYK – Rated Buy, price target at $115
• Medtronic PLC MDT – Rated Buy, price target at $86
• C R Bard Inc BCR – Rated Neutral, price target at $205

Ridley noted that there is a significant correlation between the capital efficiencies of the MedTech companies and their valuations, while adding that stocks of Boston Scientific, Edward Lifesciences and ST Jude Medical are likely to deliver the most material improvement in ROIC over the next three years.