Good afternoon, As always, email us if you have any questions on any of the data or our takeaways - .
KEY CALL OUT
As we highlighted in this morning's brief, we're in this early MicroQuad 1 stage and waiting for Street estimates for 2022 to move across our stocks, including those that look better to us fundamentally now than earlier in 2021. A few of our stocks have been incredibly volatile: Natera (NTRA), AMN Healthcare (AMN), One Medical (ONEM), and DarioHealth (DRIO), but their respective stories are better in many ways as we sit here today. We also continue to work on Exact Sciences (EXAS) and Teladoc (TDOC) in the background, as we don't want either of those to turn against us and detract from the positive performance contributions each has made YTD. Take a look at the current outlook for TDOC below, as the forecast has deteriorated and the stock is no longer expected to cycle into a MicroQuad 2 position between now and end of 1Q22.
We aren't trying to bead a dead horse on this, but in case you missed it or haven't gotten to it, yet, we see COVID cases vs. hospitalizations as a key item to watch. The Delta wave + Omicron threat has added uncertainty to an already strained labor/staffing situation that's impacted companies to varying degrees. As of this morning, the rate of hospitalization is trending below prior waves - specifically, compared to the initial Delta Variant wave, hospitalizations are ~25% lower for the same case volume. Post-Thanksgiving, we are in the window where cases should be accelerating following holiday gatherings, so we'll be watching the data for any inflections this week. If vaccine efficacy and natural immunity hold up, or if Omicron isn't as bad as Delta, as the news our of South Africa suggest, perhaps we'll see 2022 Estimates start to move sooner than later.
CLICK HERE for the full weekly update (our Sector Distillation deck).
ESTIMATE REVISION TRENDS
MICROQUADS*
Noteworthy this week:
MicroQuad 2 is thinning out as MicroQuad 3 fills up. We're looking for stocks rotating around in tight or broad patterns, as a tight turn could push a NTRA, for example, back up to MicroQuad 2. Or, the stock, which remains one of our favorite longs, could slide toward MicroQuad 4.
TDOC - Still in MicroQuad 1 but the outlook is now for a slip back to MicroQuad 4. Unless something changes in a big way, any strength between now and the end of 1Q22 should be sold.
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).
We're adding the performance of the model portfolio here this week with some updated data points:
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.
