Coronavirus Hits S&P 500: 4 MedTech Stocks That Fared Better

The coronavirus pandemic continues to rattle the global stock market. Per a report by Fitch Ratings, world economic activity is expected to decline 1.9% in 2020, with the U.S., eurozone and U.K. GDP down by 3.3%, 4.2% and 3.9%, respectively. 

Within the United States, most companies across various industries have lately started bearing the brunt of the public health crisis. This has led to the slashing of their first-quarter guidance owing to apprehensions of revenue losses. As a bitter consequence, last week U.S. jobless claims increased a record high of 6.65 million, doubling up from the earlier week’s record of 3.31 million. This is a clear indication of how catastrophic the pandemic is for the economy.

Economic Stimulus: A Ray of Hope?

On Mar 27, the U.S. Senate passed a $2-trillion stimulus package to help the American economy recover from the economic crisis. Within Healthcare, one of the hardest coronavirus-hit sectors, this stimulus is likely to have a solid positive impact.

The relief package constitutes of more than $100 billion in emergency funds which will be used to compensate hospitals and other health care providers for revenue losses. The stimulus will also help alleviate the tremendous burden of financial costs being incurred by the healthcare sector owing to the pandemic. The measure also involves the U.S. government spending up to $16 billion to refill the nation’s depleted stock of medical gear, such as ventilators, medicines and personal protective equipment or PPE.

However, many market watchers apprehend that the effect of this fiscal stimulus might not be prominent, if the pandemic doesn’t die out soon. Meanwhile, a number of them see a silver lining to it. Stephen Innes, chief global markets strategist at AxiCorp, stated "The market is running with the assumption that while this tumult will be the deepest recession in modern-day financial history, it will also be the shortest." (as reported in CNN Business).

Stocks That Outpaced S&P 500 Gains

Here, we are focusing on four S&P 500 stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) that have lost much lesser than the S&P 500 during the past two-month period (S&P 500 was down about 23.8%). You can see the complete list of today’s Zacks #1 Rank stocks here.

McKesson MCK: This Zacks Rank #2 company’s Biologics business, which is an independent specialty pharmacy for oncology and other rare and complex therapeutic areas, was recently selected by AkaRx, Inc., a subsidiary of Dova Pharmaceuticals, Inc., as a specialty pharmacy provider in a limited distribution network for DOPTELET (avatrombopag).Biologics was also selected by Blueprint Medicines Corporation as a specialty pharmacy provider for AYVAKIT (avapritinib) for the treatment of patients suffering from metastatic gastrointestinal stromal tumor (GIST). 

In the past two months, the stock has lost just 10.2%.

Cardinal Health CAH: This Zacks Rank #1 company, a nation-wide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers, has benefited from the coronavirus outbreak as demand for medical products such as hospital gowns, masks, gloves, infection prevention kits and ventilators has picked up significantly.

In the past two months, the stock has lost 9.4%.

IDEXX Laboratories IDXX: This leader of veterinary diagnostics launcheda new rapid digital cytology service, which digitally connects veterinarians to the largest global community of more than 100 veterinary clinical pathologists, in January. This aids vets in receiving cytology interpretations within two hours. The service is powered by a new in-clinic instrument and IDEXX’s proprietary VetConnect PLUS software.

In the past two months, this Zacks Rank #3 stock has lost 13.1%.

Thermo Fisher TMO: This global manufacturer of scientific instruments recently attained EUA from the FDA for its diagnostic test to be used immediately by CLIA high-complexity laboratories in the United States. The test has been developed for the detection of nucleic acid, exclusively from SARS-CoV-2. The authorized test utilizes the Applied Biosystems TaqPath Assay technology and has been developed to deliver patient outcomes within four hours of a sample reaching a laboratory. The estimated time-to-result constitutes of time for sample preparation and instrument analysis. The EUA test is optimized for use on the company's Applied Biosystems 7500 Fast Dx Real-time PCR instrument. The instrument is covered under the EUA and is already utilized in clinical laboratories across the globe.

In the past two months, this Zacks Rank #3 company’s shares have lost 9.6%.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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