Weekly Themes | April 6, 2020 - April 10, 2020
Estimates Have Not Bottomed | In the midst of COVID-19 and Quad 4, our Fundamental Equity Quads (FEQs) Model continued to hold up. Using this model, we turn our attention to the Estimate Revision Cycle and consider whether this is a true V-Bottom. Although we recognize that prices will front run the turn in estimates, we do not believe we're close to the end of the revision cycle. Rather, we believe that we've barely gotten to the part where management teams are willing to express that they don't know what's coming. That hardly seems like the place to be bottom fishing for stocks. In our view, things are likely to get more difficult from here.
Health Care Labor Demand | Despite mounting unemployment claims and job losses in other sectors, Health Care is likely to continue experiencing positive growth in Labor Demand. This disparity is the result of Health Care's unique opportunity to be the first line of defense in this crisis.
TDOC App Downloads | The App Download Data continues to soar, signifying what we believe to be the start of a long-term adoption of Telemedicine. Despite the many competing platforms and entrants, Teladoc App Downloads remain up and to the right with a positive revision cycle.
Venture Capital in Biotech | Pension and endowment allocations are likely to re-balance away from venture allocations (and likely private equity as well) as both equity and fixed income returns fall. This will have an impact on access to capital for speculative biotech. Prior cycle downturns in biotech VC funding typically last 2-3 years following the end of a recession before speculative appetites return, new deals are funded, and public equity enthusiasm returns. The 2020-? cycle looks to be potentially more damaging than prior cycles. Retrenchment from current level (all time highs) are likely to be significant.
GH Claims Data Update | 1Q20 Clinical testing volume will be lower sequentially even before the impact of COVID according to our claims analysis. At 20x EV/Sales, a negative revision cycle emerging, consensus will have to model in additional capital needed to fund operations longer term. Clinical testing revenue is 45% of total, the remainder sourced from biopharma customers, some who are dependent on access to VC funding.
LINKS TO This Week's Events
Position Monitor | March 6, 2020
CLICK HERE for video & audio replays.
CLICK HERE to access the associated slides.
COVID-19 Metro Tracker Update, Google Mobility Data, and the Kansas Cyclone
CLICK HERE for video & audio replays.
CLICK HERE to access the associated slides.
GH | Best Idea Short | Volume Trending Sequentially Lower Even Pre-COVID
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CLICK HERE to access the associated slides.
All data available upon request. Please reach out to with any inquiries.
Thomas Tobin
Managing Director
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Emily Evans
Managing Director – Health Policy
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William McMahon
Analyst
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