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Our research shows that recent U.S. recessions coincide with abnormally large increases in diabetes prevalence. We surmise that the stress and anxiety brought on by widespread unemployment leads to negative public health outcomes.
Given soaring levels of U.S. unemployment, pandemic-related anxiety, and stay-at-home orders, we predict that the coronavirus recession will have a stronger adverse impact on diabetes prevalence than the past three recessions, leading to stronger long-term demand for diabetes devices. This long-term tailwind will likely benefit medical device companies including ABT, DXCM, PODD, MDT, and TNDM.
However, we think that near-term demand for diabetes devices could fall short of seemingly optimistic consensus expectations as pressured consumers shift to lower cost alternatives to manage their health, e.g. multiple daily injections (MDI). In our opinion, this risk is greatest for pure-play insulin pump makers, i.e. PODD and TNDM.
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