Good afternoon, Stocks mentioned herein include NTRA, LFST, DRIO, TDOC, FLGT, and OMCL. As always, email us if you have any questions on any of the data or our takeaways - .
KEY CALL OUT
COVID-19 related hospitalizations continue to tick higher, but the commentary - anecdotes and early data - around the severity of Omicron cases remains encouraging. The disruption caused by deferred procedures will pass but will also create additional stress on the system and clinicians/surgeons because "we" will be playing catch-up again (similar to 2Q and early 3Q21). That's part of the reason we think the re- re-open - not a typo - will be crazy. For now, labor/staffing issues are turning out to be a real drag on the U.S. Medical Economy as we launch into 2022. As we wrote/alluded to in this morning's brief, we fully expect commentary at JPM '22 and on 4Q21 earnings calls to include heavy doses of labor-related detail, including a variety of explanations and excuses. Access to physicians'/specialists' offices - or lack thereof - could also be a frequent discussion topic.
For now, our next 12-month (NTM) estimate trend data look weak-ish and likely to bottom late in the quarter or in April, as Omicron (and maybe a little Delta) ramps then declines and the consensus fails to stick its neck out and push 2022 estimates higher until it's safe[r]. There's a lot of uncertainty out there; however, if new cases roll over and crash like past waves and South Africa data are currently, and if health systems/providers can find a way to manage through this - two big IFs, we know - then things could change quickly. 2022 could be huge for some of our favorite stocks. To name a few: Natera (NTRA) is set up for a big year of growth on the back of Signatera, which launched into the heart of the pandemic; LifeStance (LFST) saw its shares clobbered last year on above-average clinician turnover, and our patience might have paid off; DarioHealth (DRIO) could double its revenue; and Teladoc (TDOC) should continue to struggle to find its way.
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 this week. The lone mover to MicroQuad 2 is FLGT, which we've done some work on and may take another look at. OMCL, the global pharmacy tech company, shifted to MicroQuad 3 (from 2), where it's still a long (just a smaller weighting). MicroQuad 1 looks interesting - this basket of stocks has underperformed (as it should) and includes TDOC, NEO, and GH.
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).
Here's how the MicroQuads performed in 2021 + the performance of the model portfolio:
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.
