Good afternoon, Stocks mentioned briefly herein include DGX, AMN, ACHC, VEEV, BDX, and SGRY. As always, email us if you have any questions on any of the data or our takeaways - .
KEY CALL OUT
We titled this morning's briefing "Timing is Everything" because the IHME pulled the forecast for peak infections forward to this week, and the estimate trend for the Health Care Sector, in terms of the Acceleration of forward estimates, is starting to hook up a little. The bottom, in estimate terms, may coming into focus. Others, including Mike Taylor who we interviewed on Friday, think there is an ongoing Hedge Fund/institutional redemption cycle that will finish playing out over the next couple of weeks. If new cases start to decline, hospitalizations drop, etc., then we think the reopening, which Delta and the subsequent Omicron waves disrupted, can resume. The reopening won't be even, but companies impacted by the deferral/delay of procedures and the related up and downstream services can benefit, and we may see a number of stocks transition from the Short to Long bucket(s).
The ranks of the MicroQuad 2 stocks, with steep and accelerating estimate trends, have thinned considerably. On the other side, there will be some tougher comps and stocks will get stuck in the Short bins (DGX could be a great example - time will tell). Of course, labor remains a massive problem through out the industry, which benefits some (AMN) and hurts others (ACHC). As the Macro environment evolves, either into a shallow Macro Quad 1 or Macro Quad 4 in the coming quarters, we'll continue using our MicroQuads as a screening and risk management tool.
CLICK HERE for the full weekly update (our Sector Distillation deck).
ESTIMATE REVISION TRENDS
MICROQUADS*
Noteworthy this week: We've included MicroQuads 1 and 4 this week. There's not much to say about MicroQuad 2, as it's down to 8 stocks (two of them are being acquired). Much of the action will be in MicroQuads 4 (what gets stuck) and 1 (what can rotate/improve vs. what slips back to MQ4).
VEEV moved from MicroQuad 4 -> 1, a less bearish position/outlook (smaller short allocation).
Also, BDX and SGRY rotated down to MicroQuad 3 from MQ2, smaller long allocations.
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 the model portfolio performance:
Position Monitor Stocks**
All data available upon request. Please reach out to with any feedback or inquiries.
Best,
Thomas Tobin
Managing Director
Twitter
LinkedIn
William McMahon
Analyst
Twitter
LinkedIn
Justin Venneri
Director, Primary Research
Twitter
LinkedIn
*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.
