Health tech companies could make sense for healthcare investors in 2023 as a defensive sector

Amid fears of inflation and economic uncertainty set to unfold in 2023, one healthcare sector is poised to turn a profit for investors: health tech companies.

That’s the assessment from Canaccord Genuity’s William Plovanic, who calls medical technology “defensive”. field with fundamental improvement.”

He is particularly bullish on companies in the fields of cardiology, neuromodulation, respiratory, ophthalmology, oncology and organ transplantation.

“We expect demand to be sustainable despite the possibility of a recession,” Plovnic wrote in a recent note to investors. “We expect growth to accelerate in 2H/23 when [foreign exchange] annual headwinds and diminishing healthcare staffing problems.”

He added that given the US’s aging population as well as the extreme conditions faced by many medical technology companies’ products, a recession would not have much of an impact and “tech Healthcare is a good place for investors to get through the impending tough times.” storm.”

The long-term is also promising for health tech companies, Plovanic said, given the fact that by 2030, the entire Baby Boomer population will be 65 years of age or older and represent 21% of the US population.

Right off the bat, the biggest challenge facing health tech companies in 2023 is the shortage of healthcare workers, although Plovanic expects this to subside during the year.

Plovanic has three stocks he’s particularly bullish on: ShockWave Medical (NASDAQ:SWAV), TransMedics (NASDAQ:TMDX) and Nevro (NYSE:NVRO).

Shockwave (SWAV) markets intravascular lithotripsy for calcified plaques in patients with peripheral vascular, coronary, and valvular disease. From the beginning of the year until now, the stock has been ~9% increase.

Plovanic has a price target of $247 (up ~18% based on Friday’s close). He noted that the arrival of new products will help increase the average selling price and boost overall growth for the company. He cites the new M5+ device to treat calcium buildup in peripheral arteries and the upcoming launch of L6 in the first half of 2023 and improved coronary C2+ in the second half of the year.

TransMedics (TMDX) provides organ transplant therapy to patients with end-stage organ failure. From the beginning of the year until now, the stock is 192% increase.

Plovanic’s target price is $68 (up 14%). He noted that by 2022, TransMedics could not keep up with demand for its products. However, the company has focused on hiring more staff and increasing cleanroom capacity.

The analyst appreciates the company’s National OCP program, which makes it easier to ship organs across the country. Plovanic notes that TransMedics (TMDX) has created 15 geographic deployment areas for the program, is adding support staff, and plans to add transportation capabilities with a flight logistics provider.

The collaborator looking for Alpha Tyler Maryott recently called TransMedics (TMDX) his top picks for 2023.

Nevro (NVRO) is known for its Senza spinal cord stimulation system (“SCS”) for the treatment of chronic pain. From the beginning of the year until now, the stock is down ~53%.

Plovanic has a $67 price target (up ~67%). He predicts annual revenue growth of 14% by 2023.

Plovanic notes Nevro’s (NVROThe recently launched HFX iQ system is the first SCS system with artificial intelligence capabilities as it can make adjustments based on an individual’s perception of pain. This benefit will help the company’s sales reps get new accounts, he added.

Finally, the analyst says there are other companies in the field that he considers a good buy — such as Boston Scientific (NYSE:BSX), the semi-dark region (PEN), Medical Inari (NARI) and iRhythm Technology (IRTC) — but ideally investors should wait to buy until the stock declines or business momentum picks up.