Although IFLO is not specifically mentioned, IFLO's sector received favorable comments from BEAR STEARNS:
<Industry Overview
Medical Supplies & Devices Industry
We believe there should be a flight to quality and highlight Johnson & Johnson (JNJ, Attractive) and C.R. Bard Inc. (BCR, Buy).
We have checked in with BCR over the last few days. We think BCR should meet or beat our $267 million sales estimate when they
report on 4/19. We think the BCR story is high single-digit revenue growth (ex-currency) and mid-teens EPS growth because of
operating leverage and new products and product mix. BCR has not had a new product for some time, but BCR has been working for
a while on an endoscopic suturing system for Gastric Reflux Disease (GRD).This actually repairs the condition rather than just
treating the condition. Based on our research, we think this system could be useful in 15% of the GRD patients, or 750,00 people,
translating into a market of about $500 million. We are not changing our numbers on BCR. This product bolsters our confidence in
BCR? s ability to bring new products through the development process. BCR trades at 13.5x our 2001 number. We continue to think
this is a good time for people to accumulate JNJ. JNJ is trading just above its historic relative lows and is cheap relative to the Street.
People are concerned about the issues we have seen of late on the drug side of the business. We believe JNJ will deliver their
numbers, JNJ is comfortable they will deliver the numbers. Throughout the year, positive events should occur that will excite
investors, such as an important stent approval this summer. If we wait for the outcome of some of the issues that are plaguing JNJ
now, it will be too late to buy the stock at a cheap price.
(JNJ) Bear Stearns: 12/2000E $3.36 12/2000E $3.85
(JNJ) Consensus: 12/2000E $3.35 12/2001E $3.79 Consensus Rating: 2.1 (last updated 4/5)
Healthcare Services/Facilities Sector Update
Given the volatility in both the broad market and NASDAQ, we highlight the more traditionally defensive hospital sector and some of
the companies we think are trading at attractive valuations. In terms of history, the hospital group for much of the 1990s was viewed
as one of the leading ?defensive? sectors in the economy. The basic rationale behind this assumption, of course, was that medical
spending trends are typically not correlated with the business cycle, at least at the hospital setting, and wage trends move inversely
with the economy. In times of either declining corporate profits (at the aggregate levels) or overall market uncertainty, hospital stocks
have historically been strong outperformers. Though cuts enacted under the Balanced Budget Act of 1997, as well as the rise of
managed care, eroded the perception of the group's defensiveness, we would argue that Medicare givebacks (current and anticipated)
and backlash against managed care cuts is heralding a return to the sector's traditional defensive nature. With all of our companies
done with Q4 earnings and Tenet Healthcare reporting solid fiscal Q3 earnings, it appears the earnings environment has improved
and has indeed stabilized. Investors should focus on three names in the group in this current environment, namely Columbia/HCA
(COL, Buy), Tenet Healthcare (THC, Attractive) and Universal Health Services (UHS, Buy).> |
