The health care equipment (“MedTech”) sub-industry has been the 2nd best performing sub-industry in the health care sector in 2018 and 2019 year to date. To assess whether these companies deserve their sky-high valuations, we examined trends in capital efficiency and business reinvestment relative to investor and analyst expectations.
Our analysis suggests that the recent and anticipated improvements in the capital efficiency of BSX and SYK may be underappreciated by investors.
On the other hand, we find that investors may be holding onto unrealistically high expectations for ISRG, which is at risk of ceding competitive advantage in the near future.
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