Analysis of the Reasons for the Rise of Stocks in European and American Large-Cap Medical Technology Companies
The medical technology stock market has entered a boom period with the development of ultra-large M&A activities that will help boost the share price of both the acquirer and the prey.
For medical technology companies, 2014 was a turbulent year, but for big-cap medical technology companies, performance was quite good. During the three-and-a-half-year period, no stock of a large-capacity medical technology company declined.
Overall, the cohort of large-capacity medical technology companies has increased their market value by a total of 75 billion US dollars, and even the worst-performing large-capacity medical technology company's share price growth has exceeded the overall market average growth.
In this sunny environment, you can also see the cloud caused by the stock index. In the United States, with the growth of the medical and healthcare equipment market, the US medical technology stock index is optimistic. Among them, the Dow Jones US Medical Equipment Index and the Standard & Poor's 1500 Healthcare Equipment and Supply Index rose by 22% and 23% respectively. . However, it is another scene in Europe. For example, the Thomson Reuters European Healthcare Index increased by only 3% in 2014.
Table 2014 related medical technology stock growth
Although these indexes do not tell us that all the stories are true, the gap between the indices is very large. And in the IPO market, Europe seems to be seriously lagging behind.
Oligarchic growth
Although the stocks of large-capacity medical technology companies have shown growth, this queue is already shrinking and will continue to shrink in the next few months. This is the result of the merger and spin-off of medical technology companies in 2014. Johnson & Johnson has now been removed from the analysis. Due to the divestiture of the company's diagnostic business, the medical technology business has been so small that it is unlikely to affect the performance of its stock.
From the perspective of stock price growth, although the leader, Ke Hui Medical, grew 53% in 2014, the company will soon disappear. The company will be acquired by Medtronic, which is the fifth largest growth in large medical technology companies with an annual growth rate of 26%, and will complete the transaction in the first half of 2015.
Since this is a mixed cash and stock transaction, the actual transaction amount of this transaction will be $43 million higher than the $43 billion announced by the parties on June 16, 2014. Kehui Medical’s shareholders will exchange 0.956 shares of Medtronic’s shares for $35.19 in cash. According to the stock price on December 31, it can be converted into 104.21 US dollars per share. In the next few weeks, regardless of what happens in the medical technology market, Medtronic and Kehui Medical's stock will be in step.
Beckton Dickinson, another company that has risen in share price of big-cap medical technology companies, is also heavily credited with mergers and acquisitions. Beckon Dickinson, one of the world's largest medical technology companies that manufacture and market medical devices, medical systems and reagents, remained flat in the first three quarters of 2014, but on October 6 the company announced that it would Shares began to rise after the dollar’s ​​acquisition of CareFusion, a San Diego-based medical technology company that works to reduce medical errors and prevent infections in hospitals. In the next three months, Beckton Dickinson's share price rose by 11%.
Table 2014 Big Market Value Medical Technology Company Stock Comparison
As people often say, the aging of the population is a boon to the company. The company has seen an enviable growth in 2014: the urinary business and incontinence business grew by 12%, with an overall increase of 10%. In this market, patient choice is the biggest factor, and Coloplast emphasizes that its products are both simple and practical, and aesthetically pleasing design will help them achieve this goal. The share price of Cologne, based in Denmark, has risen 41%, and the company’s stock has continued to grow steadily over a one-year period; a stock repurchase program proposed by the company has played a part. Coloplast manufactures equipment and ostomy bags for urine and fecal incontinence, as described by the company on the website, "very personal and meets private medical needs."
In the hospital sector, although Coloplast is also selling its equipment, the competition is even more brutal. According to UBS analysts, Concord’s private business rival, Conved, is in the midst of a price war and may see its market share from Coloplast in the future. According to EvaluateMedTech, by 2020, the expansion of Coloplast will be even slower, with an annual growth rate of only 7%.
Rugged journey
In contrast, the surgical robot manufacturing company IntuitiveSurgical's stock has risen by 38%, but it has also experienced some ups and downs. After the company announced in April 2014 that the FDA approved an upgrade to its flagship DaVinci system, stocks began to rise rapidly.
This kind of good start is better than nothing, but after the company released its quarterly report of weak first-quarter results, it released the guiding principle of 2014 expected sharp cuts, that is, the company's growth in 2014 will be 2 %-8%, instead of the previously announced 9%-13%. Even with the recovery of IntuitiveSurgical's second quarter, the company still announced that its profits will shrink by 35% due to the decline in sales, but this figure still exceeds Wall Street's expectations, thus making the company's stock rise again.
For companies like IntuitiveSurgical, even if the profits fall, it can be seen that the stock price rise company, it is unfair for a single medical equipment manufacturer, St. Jude Medical, to be excluded due to mass. In 2014, St. Jude Medical's share price rose by 5%, far exceeding the 3.2% increase in the medical technology stock market. However, it is the extraordinary growth of this large-capacity medical technology company queue that also represents the downturn in the medical technology stock market. Although St. Jude Medical has successfully acquired two companies in 2014, no company has a turnover of $400 million; therefore, if the company wants its share price to soar, the most sensible suggestion is to consider multi-billion dollar mergers and acquisitions.
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