Good morning, It looks like the revenue estimate trend will remain under pressure through year's end and into early 2022. 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
New COVID-19 cases continue to tick higher and the NTM revenue estimate trend remains under "pressure" with growth flat and acceleration pulling back. We've got a complicated, yet simple, backdrop here. Our stocks are collectively in MicroQuad 3, and we're in an evolving MacroQuad 2 backdrop. We can see Health Care lagging and have been commenting on that all year. As new COVID-19 cases remain stubbornly high, we're seeing hospitalizations remain relatively low (very good news, especially if it holds true). Waning vaccine efficacy is somewhat offset by natural immunity (a whole lot of Americans have been infected by SARS-CoV-2 and have had COVID-19 recently), but boosters are being given and it sounds like the new Omicron variant isn't horrible. Plus, Pfizer's antiviral seems better than Merck's/Ridgeback's. All that aside, the labor/staffing issues that we have been harping on are a bigger issue for estimates and the industry to deal with (and a + tailwind for AMN).
CLICK HERE for the full weekly update (our Sector Distillation deck).
ESTIMATE REVISION TRENDS
MICROQUADS*
Noteworthy this week:
NEO and DGX remain in the penalty box - aka MicroQuad 4 - but you can see in the Position Monitor Sigma in the next section that both are in shallow[er] positions and can potentially rotate out, which looks increasingly likely for DGX given the rise in COVID-19 cases. It's also possible for NEO if providers - especially oncologists - aren't going to be overwhelmed by COVID-19 cases and people realize how important cancer screening and follow-up visits are.
TDOC's outlook as measured by NTM sales may have stabilized week-over-week following its Analyst Day presentation. That said, the transition to EV/EBITDA from EV/Sales is bearish for the stock, and the more work we do on BetterHelp, the more caution flags we see.
EYE and NSTG have fallen out of the official bins, which happens when the stock price and NTM estimate trend correlation deteriorates. We will continue to track bench and watchlist stocks like these, respectively. TXG remains in MQ2.
We're including the MicroQuad 2 bin below, as that's historically the best hunting ground for new long ideas, especially following pullbacks.
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.
