4 Large-Cap Medical Device Stocks To Buy Amid Political Woes

After Trump’s failed efforts to repeal and replace Obamacare, Trump introduced the “skinny” repeal that calls for doing away with parts of Affordable Care Act (ACA) or Obamacare like “individual mandate,” “employer mandate” and “Cadillac taxes”.

Last month, the Republicans lost the debate over skinny repeal. The United States witnessed a political dilemma after three Republicans voted in favor of the existing Healthcare Act. They probably decided to support the existing Healthcare Act based on data provided by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT). As per the report, with the abolition of Obamacare, another 17 million people will be uninsured in 2018, 27 million more in 2020 and the count is expected to increase to 32 million in 2026.

The cancellation or withdrawal of the individual and employer mandate might have made health insurance and contracted health insurance coverage expensive. This will significantly dent demand for healthcare services, impacting the medical device industry as a whole.

However, the MedTech industry is looking forward to the abolishment of the major healthcare taxes, including Cadillac tax and the 2.3% MedTech tax. Although the Republicans failed to pass the skinny repeal, it has been able to delay the Cadillac tax until 2026.

Thanks to the postponement of the Cadillac tax, the medical device industry is hopeful that the 2.3% medical device tax would be eradicated soon.

In such a mixed scenario, we feel investors should place their bets on large cap stocks that delivered positive average earnings surprises in the last reported four quarters and are witnessing upward revisions in earnings estimates.

Stocks to Pick

We have selected four medical device stocks with the help of the Zacks Stock Screener (hyperlink) to shortlist Medical Device stocks which are poised for impressive returns over the next five years. These stocks boast a Zacks Rank #1 (Strong Buy) or #2 (Buy), and has a market cap of more than $5 billion.