CNBC’s Jim Cramer praised the developing medical equipment bull market on Monday, citing favorable earnings results from linked firms across the board.
Cramer told, “It’s undeniable that we’ve got an emerging bull market in medical devices —we’ve heard the same incredibly positive story from company after company. I’m just praying we get another debt ceiling-related sell-off that drags down the entire market and gives you a chance to buy the medical device plays at an undeserved discount.”
Tons of non-urgent surgeries were put on hold as hospitals inundated with COVID-19 patients strived to provide critical care during the past few years of pandemic turmoil. But as the emergency eased up, nonessential surgeries came back, prompting an increase in the purchase of medical devices.
Cramer indicated firms like Inmode, popular for designing minimally invasive radio frequency devices mainly used for cosmetic surgery, whose earnings report earlier this month saw an increase in consumables and service income by 43%. According to Cramer, Inmode stock plummeted sharply after the report was released, possibly because the firm didn’t update its annual prediction. Cramer, on the other hand, attributed such outcomes to excessively cautious executives, calling Inmode stock a steal.
Cramer highlights Johnson & Johnson as another potential advantage, noting that the company’s strong performance in the last quarter, driven partly by the success of its medical devices division, exceeded expectations.
“When it comes to J&J, it’s all about talc right now — as in the lawsuit about their talc’s possible link to ovarian cancer,” Cramer stated. “That litigation risk is the real issue here, not earnings.”
Cramer also mentioned Intuitive Surgical, which manufactures the Da Vinci Surgical System, and posted a “true beat and raise quarter.” As per Cramer, although Intuitive sold the exact same amount of robotic arms as last year, the number of such procedures globally increased by 26% annually. Since Cramer interviewed Intuitive CEO Gary Guthart in March, the company’s stock has risen 38%.
Cramer is also interested in GE HealthCare, which he just acquired for the Investing Club portfolio.
“This company’s got a terrific diagnostic equipment division, including tons of scanners that are essential for catching and monitoring Alzheimer’s,” Cramer voiced. “As the FDA approves more Alzheimer’s drugs, we’ll need more of these machines just to know if the new medications are working.”
