Good morning, See below for our usual MicroQuad and other weekly data updates, including the link to the "Sector Distillation" slides. As always, email us if you have any questions on any of the data or our takeaways - .
KEY CALL OUT
The current reading for aggregate estimates forecasts weakening trends through 1Q22. With a Macro Quad 2 backdrop, we'll continue to favor the long side, sticking with names in MicroQuad 2 (and 3, albeit at lower exposure). We are working on a number of Best Idea candidates that line up with the broader macro and industry headwinds and tailwinds. The 3Q21 earnings commentary quickly shifted from the negative impact of Delta Variant to rising demand in 4Q21, but instead of a clear tailwind, demand has been overshadowed by its new nemesis: labor/staffing headwinds. Shortages and rising wages are hitting everywhere across the U.S. Medical Economy, from pharmacies to mental health facilities to physical therapy clinics. Whether numbers have been "reset" or set to beatable levels or if headwinds will persist remains to be seen, but we think the demand vs. labor supply duel will overshadow the expected rise in COVID-19 cases during the winter of 2021-2022. Delta Variant is likely the last majorly disruptive wave of COVID-19 infections, at least in terms of hospital admissions, deaths, and access to physicians' offices or facilities for sales purposes, which means larger pools of pent-up demand are likely coming loose in the coming weeks as well.
CLICK HERE for the full weekly update (our Sector Distillation deck).
ESTIMATE REVISION TRENDS
MICROQUADS*
Noteworthy this week:
EXAS remain in MQ1 but is trending toward MQ4 as estimates incorporate management commentary on wellness visits, sales rep access to doctors in the context of rising COVID cases, etc..
TDOC could shift to MQ2 which should be a tailwind as they comp out of the COVID headwinds IF this week's analyst meeting manages to improve sentiment and optimism about growth. However, we think our outlook for Livongo and the integrated care plans are moving our way, and estimates are likely to at best remain stable.
ONEM in MQ3 is + after being stuck in MQ4 for much of the year - this likely contributed to shares performing poorly.. see the Position Monitor grid below for its positioning. We're optimistic their model is poised to accelerate here and take the estimate trend with it. Our Provider Tracker is helping fuel the optimism.
AMN remains a small long in MQ3, long bench LFST is in MQ2, and it's unsurprising to see AMWL in MQ1 (still a short candidate).
As a reminder, if you have questions about the MicroQuad process, please try to find ~20 minutes to watch our Dec 30, 2020 call replay: Process & Utility of the Hedgeye Health Care #MicroQuads - CLICK HERE for event details (includes video link and materials link).
Position Monitor Stocks**
All data available upon request. Please reach out to with any feedback or inquiries.
Best,
Thomas Tobin
Managing Director
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William McMahon
Analyst
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Justin Venneri
Director, Primary Research
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*Please note, not all Position Monitor names make it into the MicroQuad output - most likely due to a lack of sufficient historical trading and estimate data.
**We may show stocks that we have data for but the correlation fails to meet the criteria for MQ bin inclusion week-to-week.
