Good afternoon, As always, email us if you have any questions on any of the data or our takeaways - .
KEY CALL OUT
Heading into year's end, we're weighing the risk that JPM '22 could be negative for estimate revisions alongside the implications of a Macro Quad 1 vs. Macro Quad 4 backdrop. As of this morning, positive SARS-CoV-2 tests are rising, as are COVID-19 cases, but hospitalizations remain at relatively low levels, and even deaths in South Africa are not spiking like in prior waves. Earnings will likely reflect Omicron uncertainty, and then outperformance could set in during February and March as the [revision] cycle improves. The biggest headwind(s) will continue to be staffing and COVID-19-related protocols, but the impact on stocks will not be evenly distributed.
We are shortening the leash on Quest (DGX); the stock has worked well for us despite being in MicroQuad 4, as SARS-CoV-2 testing and confirmed cases have been on the upswing due to the remnants of Delta and Omicron's ridiculously rapid spread, but as we near 1Q22 and a potential peak of this wave, the narrative could change.
AMN, which now looks much more stable to us in MicroQuad 3, will continue to benefit from all the staffing and labor-related concerns. Last, for now, we think LifeStance (LFST), which screens as MicroQuad 2, has a better, "Why you should come work here..." story than others in the mental health arena. There isn't enough history for LFST to make its way into the formal model portfolio, yet, but we think they'll be able to continue to grow the clinician team to meet rising demand.
CLICK HERE for the full weekly update (our Sector Distillation deck).
ESTIMATE REVISION TRENDS
MICROQUADS*
Noteworthy this week: We've included MicroQuads 2 and 1 below, but see the link to the full PDF for more.
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.
