瑞信-美股-医疗用品与设备行业-COVID-19医疗技术估值下调：降低2020与2021年估值-2020.3.6-32页.pdf

U.S.Medical Supplies&Devices COVID-19 Med Tech Estimate Cut:Reducing 2020&2021 Estimates6 March 2020Research AnalystsMatt Miksic212-325-4381matt.miksiccredit-Vik Chopra212-325-1749vik.chopracredit-Equity Research AmericasDISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.2Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Background and Introduction3/6/2020Reducing Estimates&Targets Based on Our Analysis and FrameworkGiven concerns regarding the potential impact on business trends and valuations in Med Tech and across the broader market,we have put together a framework for assessing the potential range of effects the spread of the virus could have on the companies in our universe.Having evaluated and analyzed the risks and potential range,scope and duration of these issues on our universe,we believe the potential impact may vary significantly,based on regional exposures and revenue mix of each company.Due to the level of volatility driven in part by the rapidly evolving news flow related to COVID-19,and also by the uncertainty about the range of the potential impact on sales and earnings,we have opted to publish our framework as a guide for investors to help assess these risks.In addition,given our comfort at this point in the middle of the range of our Blue Sky and Grey Sky scenarios(i.e.our Base Case),we have taken the additional step of reducing our estimates in accordance with the middle of these ranges,and make what we view appropriate corresponding adjustments to our target prices.Please see slides 9 through 11 for a summary of these changes.3/6/20203Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Why Cut Estimates Now?3/6/2020 Stocks Already Discounting Impact of COVID-19,Our Framework Aims to Put Sharper Point on“Whats Priced In”:While it remains early in understanding the scope and duration of the COVID-19 impact on Med Supplies and Devices projections,we believe our analysis provides a reasonable framework,and our new estimates represent the middle of that range;Management Commentary on China Impact in Q1 Has Been Clear,and Impact on Q2-Q3 Seems Likely to Be More“When”Than“If”:A number of management teams in our universe with exposure to China and APAC have commented on the significant slowdown in procedures,particularly deferrable surgeries in that region(see slides 26-29).While there has not been much color on the impact beyond March 31,it seems highly likely that pressure will continue in China and spread in some form to other regions,including the US.Our framework takes these risks into consideration to assess the potential impact on Q2-Q4 and 2021.3/6/20204Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Key Take-Aways From Our Framework Analysis3/6/2020 Highest China and APAC Exposure and Deferrable Surgery Mix Most Affected:The most significant factors driving differences in projected impact across our universe are regional exposure and sales mix;Weve reduced sales estimates for 2020 in the low-to-mid-single-digit range for companies with more US-focused businesses,and higher mix of less-deferrable procedures(e.g.BAX,EW,IART,ORGO);Weve trimmed sales estimates by mid-to-upper single digits for companies with higher mix of deferrable procedures and greater exposure to OUS and China(e.g.ALC,BSX,MDT,ZBH);Despite Estimated Hit to 2020,We See 2021 Impact as Modest:Given our expectations that the virus impact is less likely to be structural,we see 2021 sales as bouncing back with above trend growth rates.Our Grey Sky scenario assumes virus impact continues into 1Q21,but even in this scenario,we would expect volumes to stabilize in 1H21.Biggest Disconnect:SYK and ZBH Both Sold Off on Ortho Concerns,But ZBHs exposure to deferrable procedures(90%)is significantly higher than SYKs(50%),by our estimates.3/6/20205Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Easing Uncertainty Should Drive Improving Performance3/6/2020 China Risks for Q1 Have Been Widely Discussed by Med Tech Management Teams,But Full-Year Global Impact Unaddressed:We expect management teams to provide updated comments on 2020 outlook either prior to or during Q1 earnings;Our Scenario Analysis Provides a Reasonable Framework for Where Estimates Can Go,In Our View:Our scenarios include a range of potential impact on sales growth,from a 1.0 1.5%reduction in sales in our Blue Sky scenario,to a 6.0 6.5%reduction in our Base Case scenario,and 13.0 14.0%reduction in our Grey Sky scenario;Our New Target Prices,Based on Reduced Estimates,Reflect Compelling Upside:After cutting numbers for 2020 and 2021 and reducing most target multiples by 0.5x 1.0 x,we see the potential for improving performance in the weeks and months ahead;Regional Risks,End-Markets and Sales Mix Drive our Framework:Our scenario analysis incorporate regional exposures,potential duration of COVID-19 impact on volumes,potential for recovering(i.e.“catching-up”on deferred procedures and revenue mix.3/6/202029003000310032003300340035002/142/152/162/172/182/192/202/212/222/232/242/252/262/272/282/293/13/23/33/4U.S.reports sixth death,worldwide confirmed cases cross 89,0006Credit Suisse Securities(USA)LLC,Matt MiksicSource:FactSet,Credit Suisse estimates Timeline of Selected Key Events Against Backdrop of S&P500 PerformanceS&P500 Price Performance,Feb 14-Mar 4France announces the first death of coronavirus in EuropeDeath toll increases to 1,873 as the total number of cases climbs over 73,000Italy and U.S.confirm one new case and cases in South Korea rise to 204UK reports 4 new cases,Italy infections surge to 79;total infected rises to 2,458CDC confirms 14 cases in U.S.Worldwide cases rise to over 81,000 infectedWHO raises outbreak risk to Very High;U.S.reports two cases of community spreadU.S.reports first death(2/29),South Korea reports addlcasesFed cuts rates 50bps to combat COVID-19(3/3)3/6/2020Biotech,Managed Care and Pharma are driving the bulk of HC outperformance vs.the S&P500Med Tech has outperformed the S&P500 by 110 bps,an improvement from last weekThe only HC subsector which underperformed the S&P500 was Distributors7Credit Suisse Securities(USA)LLC,Matt MiksicSource:FactSet,Credit Suisse estimates Biotech,Managed Care and Pharma Drive HC Outperformance,Partially Offset by Distributors Healthcare Subsector and S&P 500 Price Performance,Feb 14 Mar 4-1.8%-2.5%-2.7%-3.9%-4.2%-4.2%-4.6%-6.3%-7.4%-8.9%-12%-9%-6%-3%0%BiotechMngd.CarePharmaTotal HCProvidersLife SciHC ITMedTechS&PDistrib.3/6/20200.4%-0.2%-2.2%-2.9%-4.4%-5.7%-6.9%-7.4%-8.1%-8.3%-8.4%-8.4%-10.4%-10.4%-11.7%-13.9%-17.9%-19.1%-25%-20%-15%-10%-5%0%5%ALCWMGIBAXDisruptiveMS&DJNJEWSMIDMS&DS&PLCGrowthMS&DLC Div.MS&DBSXABTIARTSYKMDTZBHGMEDNUVADisruptive outperformance(500 bps)reflects potential to grow through the flu,and BAX and JNJ have potential to benefit from higher spend on flu care Ortho and Spine,viewed by investors as most deferrable,are likely contributing factors to underperformance for SYK,ZBH,NUVA and GMED,as well as potentially MDTABT appears to have come under pressure due to its EM exposure,although we believe this largely ignores its significant favorable exposure to diagnostics equipment and reagentsALCs relative outperformance over the past two weeks remains puzzling,especially given its above-average exposure to EM and OUS 8Credit Suisse Securities(USA)LLC,Matt MiksicSource:FactSet,Credit Suisse estimates See slide 29 for a list of companies included in the indicesMed Tech Group Performance Reflects Potential Strengths and Vulnerabilities vs.S&P500Med Tech and S&P 500 Price Performance,Feb 14 Mar 43/6/20209Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Summary of Framework and Estimate Revisions3/6/2020 Change in 2020E Sales(%)Change in 2020E EPS($)Change in 2021E Sales(%)Change in 2021E EPS($)TkrBlueBaseGreyBlueBaseGreyBlueBaseGreyBlueBaseGreyABT-0.9%-5.5%-12.6%(0.09)(0.47)(1.23)0.0%-0.8%-3.3%0.00(0.07)(0.34)ALC-1.8%-8.4%-18.2%(0.15)(0.60)(1.46)0.0%-1.1%-4.7%0.00(0.08)(0.40)BAX-1.0%-4.3%-9.2%(0.08)(0.30)(0.75)0.0%-0.6%-2.4%0.00(0.04)(0.20)BSX-1.9%-9.1%-20.1%(0.10)(0.45)(1.09)0.0%-1.2%-5.1%0.00(0.06)(0.30)EW-0.9%-4.0%-8.7%(0.14)(0.56)(1.33)0.0%-0.5%-2.2%0.00(0.08)(0.38)GMED-1.3%-6.2%-13.7%(0.06)(0.28)(0.68)0.0%-0.8%-3.5%0.00(0.04)(0.19)IART-0.9%-4.4%-9.5%(0.10)(0.40)(0.97)0.0%-0.5%-2.4%0.00(0.05)(0.26)JNJ-1.4%-5.7%-12.1%(0.26)(0.98)(2.29)0.0%-0.7%-3.2%0.00(0.13)(0.63)MDT-1.8%-8.0%-17.2%(0.26)(1.02)(2.43)0.0%-1.1%-4.9%0.00(0.16)(0.74)NUVA-1.5%-6.9%-15.3%(0.20)(0.84)(2.05)0.0%-0.9%-3.9%0.00(0.12)(0.56)ORGO-0.7%-3.6%-7.4%(0.01)(0.06)(0.14)0.0%-0.4%-1.8%0.00(0.01)(0.03)SYK-1.0%-5.0%-11.3%(0.24)(1.04)(2.66)0.0%-0.6%-2.8%0.00(0.15)(0.72)ZBH-2.1%-9.6%-21.4%(0.50)(2.08)(5.13)0.0%-1.3%-5.8%0.00(0.30)(1.40)Avg-1.3%-6.2%-13.6%0.0%-0.8%-3.5%10Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Summary of Valuation and New Target Prices3/6/2020 Current Valuation Current Valuation(on Revised 2020E)Revised Target Multiple Prior Revised Target(on Revised Upside to Revised TargetTkrPrice(on Prior 2020E CSe)BlueBaseGreyBlueBaseGreyTgt PriceBlue Base GreyBlueBaseGreyABT8117.517.919.724.519.018.516.010498947522%17%-6%ALC6117.918.922.535.518.518.517.57271695917%14%-4%BAX8815.715.916.818.716.016.014.09599988313%12%-5%BSX3718.219.122.936.619.519.517.55147463626%23%-4%EW20927.628.230.234.832.031.024.027827826720033%28%-4%GMED4514.314.716.320.619.018.014.06762594439%31%-2%IART5013.914.215.518.816.015.512.57069654738%31%-6%JNJ14212.512.914.016.613.013.011.517016115913313%12%-6%MDT10014.214.716.822.415.515.513.51261231219423%20%-6%NUVA6211.712.314.320.914.514.511.09289865843%39%-7%ORGO41.51.51.51.63.53.31.510983145%118%-11%SYK19016.817.218.622.619.019.015.025525024718332%30%-4%ZBH12913.013.616.225.113.011.511.5125138115997%-11%-23%Avg16.126%20%-6%11Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Change in 3-and 5-yr CAGR After Sales Revisions is MinorOur Revised Projections Call for Slower Growth in 2020,Followed by Above-Trend Growth in 2021(against favorable prior-year comparables)Despite Step-Up in Growth in 2021,Multi-Year Averages Decline Slightly From 7.5%to 6.9%3/6/2020Previous EstimatesPrev.Previous EstimatesPrev.New2017201820192017-19202020212017-21202020212017-21ABT6.4%7.3%7.7%7.1%7.3%7.2%7.1%0.9%12.5%6.9%ALCNA5.0%5.0%5.0%5.1%6.0%5.3%-4.2%14.5%5.1%BAX5.3%3.2%4.1%4.2%4.8%4.8%4.4%-0.7%8.9%4.2%BSX6.5%7.1%7.3%7.0%7.7%8.0%7.3%0.6%17.4%7.8%EW15.8%9.3%15.2%13.4%12.8%12.4%13.1%7.7%16.5%12.9%GMED5.4%12.1%9.5%9.0%7.8%8.6%8.7%1.6%14.8%8.7%IART4.5%4.3%4.7%4.5%5.0%5.2%4.7%-1.5%9.4%4.3%JNJ2.5%5.5%4.5%4.1%5.1%5.8%4.7%-1.5%11.4%4.5%MDT3.6%5.1%5.5%4.7%3.6%4.3%4.4%-4.3%14.7%4.9%NUVA2.1%5.1%6.6%4.6%5.7%6.3%5.2%-1.8%13.1%5.0%ORGO43.1%-2.5%33.3%24.6%33.3%8.9%23.2%5.0%3.8%16.5%SYK7.4%6.9%8.5%7.6%7.3%7.7%7.6%2.8%12.6%7.6%ZBH0.1%0.8%2.2%1.0%2.5%1.8%1.5%-7.3%11.1%1.4%Average8.6%5.3%8.8%7.5%8.3%6.7%7.5%-0.2%12.4%6.9%New Estimates12Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Overview of Our Analysis Framework3/6/202013Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Key Assumptions and Sensitivities Included in Analysis3/6/2020 Regional Exposures:We segment sales for each company into:China,APAC(ex-China),OUS(ex-APAC)and the US,which drives the overall risk to utilization and growth for each company;Procedure Mix:As the early impact in China appears to be focused on deferrable or less-urgent surgeries and procedures,we have included in our framework an assessment of the%exposure of each company in our universe to more deferrable procedures(e.g.hips,knees),as well as capital equipment,and less-deferrable surgeries(e.g.TAVR,oncology surgery).In addition,we estimate the%of sales attributed to flu care and diagnostics,which we estimate on the margin could benefit from the influx of patients in need of screening and flu care;Duration of Impact,and Potential for Recovering Deferred Volumes:Our framework includes a range of assumptions for the duration of the COVID-19 impact(from 4 months to 14 months,starting in Feb 2019)and the potential for companies to recapture deferred procedure volumes(0%-33%).Our Base Case assumes the mid-point of these ranges.Please see the following slide for a summary of the risk factors included in our framework,along with the Blue Sky,Base Case and Grey Sky ranges.3/6/202014Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Risk Factors and Ranges Included in Our Framework3/6/2020Blue SkyBase CaseGrey SkyVolume/Utilization Risk-Deferrable ProceduresChina50%70%90%APAC(ex-China)20%35%50%OUS(ex-China&APAC)10%25%40%US5%8%10%Volume/Utilization Risk-Non-Deferrable ProfeduresChina20%30%40%APAC(ex-China)10%15%20%OUS(ex-China&APAC)5%8%10%US0%3%5%Capital Equipment0%5%10%Flu Care/Diagnostics30%20%10%Duration of COVID-19 ImpactMonths4814Recovery of Volumes33%17%0%15Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Estimated Regional Exposures and Sales Mix,by CompanySales Mix Regional Business ExposureChange in 2020E Sales(%)TkrCap EquipNon Cap EquipDeferFlu Care/DiagNon-Def/OtherChinaAPAC(ex-China)OUS(ex-APAC)USABT13%87%26%20%41%7%16%41%36%ALC15%85%48%0%37%5%19%34%41%BAX2%98%5%15%78%6%14%38%42%BSX5%95%75%0%20%5%13%25%57%EW10%90%10%5%75%2%15%25%58%GMED6%94%90%0%4%1%4%13%82%IART5%95%20%0%75%3%7%19%71%JNJ2%98%20%2%76%5%10%34%51%MDT5%95%50%5%40%7%14%26%53%NUVA1%99%90%0%9%2%7%11%80%ORGO0%100%60%0%40%0%0%0%100%SYK20%80%50%5%25%2%9%16%74%ZBH5%95%90%0%5%5%12%22%61%Avg7%49%4%4%11%23%62%3/6/202016Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Additional Background and Updates on COVID-193/6/202017Credit Suisse Securities(USA)LLC,Matt MiksicSource:BloombergDistribution of COVID-19 Cases Remains Moving Target3/6/202018Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates China Sales Exposure By CompanyOn average,Med Tech has 5%exposure to ChinaABT,MDT and BDX have the most exposure to China at 7%Our top-picks EW,SYK and GMED have 2%or less exposure to ChinaOther names with China exposure 5%include IART,WMGI,NUVA and TFX7%7%7%6%5%5%5%5%3%3%2%2%2%2%1%ABTMDTBDXBAXALCJNJZBHBSXIARTWMGISYKEWNUVATFXGMED3/6/202019Credit Suisse Securities(USA)LLC,Matt MiksicSource:Company,Credit Suisse estimates Emerging Market Sales Exposure By CompanyOn average,Med Tech has 20%exposure to EM,including