The year ahead is looking to be an easier one for medical device companies navigating the European landscape, according to analysts with J.P. Morgan’s Europe Equity Research group.
Although austerity measures remain, major headwinds seem to be unwinding and patient volumes may finally be on the rebound as unemployment figures decline and consumer confidence grows.
Although U.S. markets remain "volatile," industry can begin to recoup from the impact of the U.S. federal government sequester and some of the initial cuts have been reduced in new budget deals, the analysts noted.
The 2.3% medical device tax which took effect at the start of last year has also begun to sink in, and the "potentially offsetting benefit from increased volumes" may begin to take effect as increased insurance coverage kicks in this year. Healthcare reform is still a wild-card, however, as issues around enrollment plans may cause some "mix headwinds" and general uncertainty.
The analysts had a less rosy outlook for emerging markets, noting "muted" growth and potential exposure to new headwinds in slowing economies. Device makers Elekta (STO:EKTA B) and Carl Zeiss Meditec (ETR:AFX) have the greatest exposure among covered companies and thus bear the most risk, according to the J.P. Morgan report.
