HEALTHCARE: DURING AND AFTER THE PANDEMIC - THE MONTHLY RESEARCH CONFERENCE CALL Wednesday, April 7, 2021 11:00 a.m. ET
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HEALTHCARE:
DURING AND AFTER THE PANDEMIC
THE MONTHLY RESEARCH CONFERENCE CALL
MODERATOR:
Jim Kelleher, CFA
Director of Research
Wednesday, April 7, 2021
11:00 a.m. ET
61 Broadway • NYC, N.Y. 10006
Telephone: (212) 425-7500WHAT’S NEW AT ARGUS?
Healthcare: During and After the Pandemic
• Jim Kelleher, CFA, Director of Research
• David Toung, Senior Security Analyst
• Jasper Hellweg, Security Analyst
Portfolio Selector-Focus List New Additions
• Southwest Airlines: leading leisure-travel airline
• Dell Technologies: positioned for office restaffing
• eBay Inc.: established Amazon rival
• Weyerhaeuser Co.: lumber price beneficiary
• Find Portfolio Selector under Portfolio Strategy on our website
Argus Quick Notes
• Shooting Stars & Falling Angels of 1Q21
• Infrastructure Stocks
• Communication Services Stocks
• Defining Millennials
• Find these on the homepage of our website
Argus Innovation Portfolio
• USA is home to entrepreneurs and innovation
• Pandemic economy recovers as digitization accelerates
• Innovative companies monetize ideas into products
• Innovation is a consistent predictor of profits growth
• Find our Theme Portfolios under Portfolio Strategy on our website
-2-MACRO FORECASTS
REAL GDP W/FORECASTS (%) TREASURY YIELD CURVE (%)
40 3
Year-Ago Current 6-Month Forecast
30
20
2
10
0
-10
1
-20
-30
Source: Bureau of Economic Analysis, Argus Research Corp.
-40 0
'00 '02 '04 06 08 10 12 14 16 18 20 22 E 3-Mo bill 2-Yr Note 5-Yr Note 10-Yr Bond 30-Yr Bond
S&P 500 QUARTERLY EARNINGS GROWTH MARKET SECTOR DISTRIBUTION - PERCENT OF S&P 500
Sectors in Green are Recommended Overweight; Blue are Marketweight; Red are Underweight
100%
80% Communication Services
Basic Materials
60% Utilities
Consumer Discretionary
40%
Industrial
Consumer Staples
20%
Energy
0% Healthcare
Real Estate
-20% Financial Services
Technology
-40%
'00 '02 '04 06 '08 '10 '12 '14 '16 '18 '20 22E 0% 5% 10% 15% 20% 25% 30%
-3-MARKET PERFORMANCE
DATA AS MARCH 31, 2021
MAJOR INDEX SECTOR
Energy
Russell 2000
Financials
Value Stocks (Wilshire Large Value) Industrials
Real Estate
DJIA
Communication Services
S&P 500 Materials
Consumer Discretionary
Nasdaq Composite
Technology
Growth Stocks (Wilshire Large Growth) Health Care
Utilities
Barclays Bloomberg US Bond Index Consumer Staples
-5% 0% 5% 10% 15% 0% 10% 20% 30% 40%
GLOBAL EQUITY MARKETS
Euro Zone
Canada
Japan
Mexico
US
UK
DJ World Index
India
Russia
China
Brazil
-5% 0% 5% 10% 15%
-4-SECTOR OUTLOOK
The Healthcare sector accounts for 15% of the S&P 500
• Performance
» Life Sciences and BioTech sub-sectors led performance. XBI ETF +87% over past 12 months, vs. 63% for S&P 500.
» Medical Device sub-sector lagged as elective procedures were deferred.
» We see Med-Device sector returning to growth as procedural volume normalizes.
• Recent Trends
» Companies are focused on race to develop and distribute COVID-19 vaccines and treatments .
» Campaign against COVID-19 will be multi-year, extending beyond 2021, leading to sustained demand for equipment
and supplies that support biotech industry.
» Success of mRNA technology shows this platform can be used to quickly develop vaccines against other viruses and
against cancers. Companies are addressing demand, providing gene sequencing equipment, outsourced manufac-
turing, and cellular components.
• Looking Ahead
» Elective procedures, such as for orthopedic knees and hips and defibrillators, will not be deferred indefinitely as de-
vices can improve quality of life.
» Political outlook – risks of regulations or legislation to curb high drug prices. We continue to monitor developments in
Washington.
-5-TOP STOCK IDEAS
Stryker (SYK: BUY)
• Stryker has industry-leading robotics-assist platform for orthopedics.
• Mako Robotics system drives increased market share for replacement hips and knees.
• Recovery in elective procedural volume, M&A, new product launches and robotics will drive
growth in 2021.
• Price target is $265.
-6-TOP STOCK IDEAS
Johnson & Johnson (JNJ: BUY)
• J&J is ramping up production of its COVID-19 vaccine. Vaccine has advantages of being a sin-
gle dose, storable at refrigerator temperature, and being effective against variants.
• J&J expects to deliver 100 million doses by end of May and one billion doses by end of 2021.
• Besides vaccine, we see recovery in the Medical Device segment, driven by recovering proce-
dural volumes. A broad commercial pharmaceuticals and biotech portfolio, along with a robust
pipeline, is another driver for growth in 2021.
• Our price target is $180.
-7-TOP STOCK IDEAS
Thermo Fisher Scientific Inc. (TMO: BUY)
• Surging demand for research instruments and testing reagents is driving robust topline and
EPS growth.
• Thermo has multiple irons in the fire to combat COVID-19 as its customers are developing
vaccines, treatments and testing solutions.
• Beyond COVID-19, Thermo is serving the global biotech industry in research, drug develop-
ment and manufacturing services.
• Target price is $530.
-8-TOP STOCK IDEAS
IQVIA (IQV: BUY)
• IQVIA is the world’s largest provider of biopharmaceutical development services and
commercial outsourcing services.
• It recently acquired the remaining interest in Q2 Solutions, a global laboratory services
organization that provides solutions for clinical trials, prompting the company to raise its
2021 guidance mid-quarter.
• Aside from its M&A activity, IQVIA is poised to benefit in 2021 from the ongoing rollout
of its Orchestrated Customer Engagement (OCE) and Orchestrated Clinical Trials (OCT)
platforms, a spate of new clinical trial startup activity and the resumption of business
development programs, and a substantial backlog.
• Price target is $220.
-9-TOP STOCK IDEAS
Illumina (ILMN: BUY)
• Illumina provides sequencing and array-based solutions designed to accelerate and simplify
genetic analysis.
• Viral surveillance, which can be performed using its sequencers, is increasingly recognized
as an effective and important tool to track the spread and mutation of infectious diseases.
» This is not only key to assessing the risk of reopening businesses during the current pandemic and predicting
the scope of potential waves of viral resurgence, but also as scientists reformulate vaccines to target new
mutations that could render previous formulations ineffective.
• It is also involved in a range of projects utilizing comprehensive genomic profiling (CGP),
which holds promise in the identification of targeted medicines for specific cancers.
• While its proposed acquisition of cancer-testing firm Grail faces federal challenge, we believe
that the market’s reaction to the news was overly stark given Illumina’s scope of involvement
within the space and the company’s sharp focus on innovation.
• Our price target is $500.
- 10 -DISCLAIMER The Argus trademark, service mark and logo are the intellectual property of The Argus Research Group, Inc. Investing in any security or investment strategy discussed in this presentation may not be suitable for you and it is recommended that you consult an independent investment advisor. Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance. Argus officers, employees, agents and/or affiliates may have positions in funds or stocks discussed in this presentation. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Argus makes no representation as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. Argus shall accept no liability for any loss arising from the use of this presentation or the materials contained in this presentation.
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