巴克莱美股医疗保健行业医疗供应与设备行业盈利预览201941551页

EquityResearch15April2019COREBarclaysCapitalInc.and/oroneofitsaffiliatesdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.PLEASESEEANALYSTCERTIFICATION(S)ANDIMPORTANTDISCLOSURESBEGINNINGONPAGE45.Restricted-InternalMedicalSupplies&DevicesEarningsPreviewsEarningskickofTuesdaywithJ&J:1QearningsforMedTechkickoffofTuesdaywithJ&J(co-coveredwithourU.S.Biopharmaceuticalanalyst,GeoffMeacham)reportingitsresults.J&J’sMedicalDevicebusinessprovidesahostofread-thrusfortherestofthesector,particularlytheorthopediccompanies.Overall,weexpectmostcompaniestoreportstrongresultsandbelieveasinthepastseveralquarters,anysurprisesarelikelytobepositive.WehadanumberofcompaniesattheBarclaysHealthcareConferenceinmid-Marchandourtakeawaysfromthosepresentations,aswellassubsequentconversationswithmanagementteams,werethattheoverallMedTechmarketconditionsremainedfavorableandthateachcorporatehadconfidenceinitsforecast.Theoneareawherewedohavesomeconcernsispaclitaxeldrug-coatedballoons(DCBs)aswebelievetheFDALettertoHealthcareProfessionalsislikelytoresultinsoftersalesuntilgreaterclarityonthesafetyprofileisgained.WeexpectsalestobepressuredatleastuntiltheFDAAdvisoryCommitteemeeting,whichisexpectedtotakeplaceinJune.BothBectonDickinsonandMedtronicsellpaclitaxelDCBs.Updatingourmodelsaheadof1Q:Inthisreport,wehaveupdatedourmodelstoreflect10K/10Qupdatesandourupdatedthoughtsontheendmarkets.WehaveincorporatedintoourmodelssalesreductionsforDCBs,whichresultedinareductioninsalesforbothBectonDickinsonaswellasMedtronic.GivenDCBsareabovecorporateaveragemargins,wehavereducedourearningsestimateforBectonDickinson.ForMedtronic,webelievetherecentdebtrefinancing(whichwehaveupdatedourmodelfor)allowsthecompanytooffsettheDCBlossthusourEPSestimatesareunchanged.PleaseseetheSummaryofourRatings,PriceTargetsandEarningsChangesinthisReportonpage2formoredetails.Updatingourpricetargets:WehaveraisedanumberofpricetargetstoreflectahighertargetPEtomaintaineachstock’srespectiverelativePEvaluation.WecontinuetobelievethesectorshouldtradeatapremiumtotheS&P500.PleaseseetheSummaryofourRatings,PriceTargetsandEarningsChangesinthisReportonpage2formoredetails.Ourstockviews:Ourratingsareunchanged.WecontinuetoseeupsideforABT,CNMD,MDT,andSYK.InthecaseofMDT,wedohavesomeconcernsontheFY20outlookaswebelieveitislikelytoaslowergrowthyearthoughwethinkexpectationsarelikelyalready“there.”WhilewerateboththestocksEqualWeight,HRCandTFXwereveryupbeatatourconferenceandwebelievebothmayhavegoodquarters.WealsorateBAXandBDXEqualWeight.WerateAVNSEqualWeight,andZBHUnderweight.WebelieveAVNSandEW’squartersmaybemixedasbothhavemoreback-endloadedyears.ZBHmanagement’scommentsatrecentinvestormeetings(includingAAOS)seemedmorepositivetoned,thuswewouldnotbesurprisedtoseea“good”quarter(“good”inthecontextofZimmerBiometandrelativetoexpectations).EARNINGSPREVIEWU.S.MedicalSupplies&DevicesPOSITIVEUnchangedForafulllistofourratings,pricetargetandearningschangesinthisreport,pleaseseetableonpage2.U.S.MedicalSupplies&DevicesKristenStewart,[e-mail],USPatrickDearchs,[e-mail],[e-mail],USBarclays|MedicalSupplies&Devices15April20192SummaryofourRatings,PriceTargetsandEarningsChangesinthisReport(allchangesareshowninbold)CompanyRatingPricePriceTargetEPSFY1(E)EPSFY2(E)OldNew12-Apr-19OldNew%ChgOldNew%ChgOldNew%ChgU.S.MedicalSupplies&DevicesPosPosAbbottLaboratories(ABT)OWOW78.0184.0087.0043.213.21-3.563.56-BaxterInternational(BAX)EWEW79.3272.0075.0043.263.26-3.693.69-BectonDickinsonandCo(BDX)EWEW246.71260.00266.00212.1011.90-213.3913.15-2CONMEDCorp(CNMD)OWOW83.1885.0092.0082.462.46-2.872.860EdwardsLifesciencesCorp(EW)UWUW191.71160.00160.00-5.195.2005.665.884Hill-RomHoldingsInc(HRC)EWEW106.28103.00108.0055.055.05-5.665.66-MedtronicPLC(MDT)OWOW86.75104.00104.00-5.155.15-5.425.440StrykerCorp(SYK)OWOW192.67203.00211.0048.128.12-9.008.960Teleflex(TFX)EWEW305.13287.00309.00811.0311.03-12.6712.680ZimmerBiometHoldingsInc(ZBH)UWUW127.92113.00117.0047.827.82-8.228.22-Source:BarclaysResearch.SharepricesandtargetpricesareshownintheprimarylistingcurrencyandEPSestimatesareshowninthereportingcurrency.FY1(E):CurrentfiscalyearestimatesbyBarclaysResearch.FY2(E):NextfiscalyearestimatesbyBarclaysResearch.StockRating:OW:Overweight;EW:EqualWeight;UW:Underweight;RS:RatingSuspendedIndustryView:Pos:Positive;Neu:Neutral;Neg:NegativeBarclays|MedicalSupplies&Devices15April20193CONTENTSSECTORPRICEPERFORMANCE.....................................................................4VALUATIONANDPRICETARGETCHANGES.............................................5EARNINGSCALLCALENDAR..........................................................................6JOHNSON&JOHNSON(JNJ)–REPORTSAPRIL16...................................7ABBOTTLABORATORIES(ABT)–REPORTSAP